£10,000 invested in Greggs shares 10 years ago is now worth…

Fast earnings progress over the past decade has seen the worth of Greggs‘ (LSE:GRG) shares explode over the past decade.

Somebody who invested £10,000 in the FTSE 250 baker again in mid-April 2015 would have seen the worth of their shares rise to £15,999. Over the interval, its share worth has leapt from £11.33 to £18.15 right this moment.

When additionally factoring in dividends, an investor would have made a cumulative revenue of £10,157. That represents a complete shareholder return of 101.6%.

However stormclouds have gathered over Greggs extra not too long ago, and its share worth has fallen sharply from 2024’s closing excessive of £31.84 reached in September.

Ought to traders right this moment think about grabbing a slice of the sausage roll maker? Or is the corporate previous its best-before date?

Enlargement continues

Greggs’ story for a lot of the previous decade has been one among aggressive enlargement and a subsequent surge in income. From having 1,650 shops simply over 10 years ago, the enterprise now has 2,618 (comprising 2,057 company-managed shops and 561 franchised items).

Having discovered the best recipe for earnings progress, the corporate, maybe unsurprisingly, has no plans to backtrack. New retailer openings hit a yearly file in 2024, and Greggs plans to have “considerably greater than 3,000 outlets” in its portfolio over the long run.

It’s investing huge sums in manufacturing and distribution to make this a actuality too. Actually, the enterprise believes two new websites in Derby and Kettering — slated to open in 2026 and 2027 respectively — will present sufficient capability for some 3,500 outlets.

Encouragingly, Greggs plans to website a higher variety of its new shops in high-traffic locations too, reflecting its pivot away from the excessive avenue. Extra particularly, it plans to centre future enlargement in the direction of journey locations resembling airports and practice stations.

The agency’s gearing as much as additional prolong opening hours throughout its retailer property too, to seize the profitable night ‘meals to go’ market. Greggs additionally has plans to maintain investing in its supply channel following latest spectacular buying and selling. Supply revenues grew by a formidable 30.9% in 2024, regardless of the powerful buying and selling setting.

27.6% rebound?

I’m hoping that these elements will assist Greggs’ share bounce again following latest heavy dips. Encouragingly, the dozen analysts with rankings on the inventory anticipate costs to rebound over the following 12 months, although forecasts aren’t uniformly bullish.

One particularly enthusiastic dealer issues Greggs shares will surge from £18.15 right this moment to £32.50 in the following 12 months. On the different finish of the dimensions, one other analysts reckons the baker will drop all the way in which again to £13.30.

The typical worth goal nevertheless, sits at £23.16. That represents a 27.6% rise from present ranges.

Are Greggs shares a purchase?

On steadiness, I feel Greggs shares are price severe consideration following latest share worth weak point. It now trades on an affordable price-to-earnings (P/E) ratio of 13.3 instances.

It’s true that buying and selling situations might stay difficult in the close to time period as client spending stays constrained. It additionally faces important competitors on the excessive avenue and elsewhere.

Reflecting these pressures, like-for-like gross sales progress at Greggs cooled to five.5% in 2024 from 13.7% a 12 months earlier. Nevertheless, my long-term view of the bakery chain is undimmed. I imagine Greggs’ share worth will rebound sharply when broader financial situations enhance.