Greggs: ~14x 2024 EPS After Results, Mid-Term Upside Outweighs 2025 Risks
Company Update (GRG LN) (Buy): We expect a return to high-single-digit EPS growth and 20x P/E to generate a 91% total return in ~4 years.
Highlights
Shares down ~10% after results yesterday, back to level last seen in 2022.
2024 results were strong, with total sales and EPS both growing by ~11%.
But like-for-like sales growth decelerated each quarter and after year-end.
We think this is temporary and medium-term growth will be substantial.
At 1,895.0p, we see a 91% total return (19.7% annualized) by 2028YE. Buy.
Introduction
We review our Buy rating on Greggs after full-year FY24 results yesterday (March 4). Greggs shares fell by as much as 14% at one point and finished the day down 8.6%, but has fallen another 0.5% as of 11:40 this morning (to 1,895p):
Greggs Share Price (Last 5 Years)
Source: Google Finance (05-Mar-25).
We initiated our Buy rating on Greggs in January and added it as a small position to our “Select 15” model portfolio in the same month. Shares are currently down ~10% since our initiation. We have been holding a small position in Greggs in real life, and doubled our position yesterday, before selling back our incremental purchase at a profit this morning.
Greggs shares are at ~14x 2024 Underlying EPS, highly attractive given its medium-term growth potential, even with U.K. macro and labour cost increases as near-term headwinds. We see a potential 91% return by 2028 year-end.
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