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Greggs (LSE:GRG) shares have fallen around 2% over the past two months. Nothing for investors to worry about, but it’s a continuation of a downward trajectory. As such, £10,000 invested two months ago would now be worth £9,800. No dividends were paid during the period, although there was an ex-dividend date. Investors holding the stock as of 1 May will receive 50p per share at the end of the month.
Growth story under threat
Greggs, long celebrated for its rapid UK expansion and affordable bakery staples, is now facing a period of decelerating growth and heightened investor caution. After years of double-digit sales increases and aggressive store rollouts, the company’s like-for-like sales growth has slowed sharply. The figure fell to just 1.7% in the first nine weeks of 2025 from 5.5% in 2024.
This marked slowdown has been attributed in part to poor weather, but analysts also highlight broader concerns. For one, the UK market may be nearing saturation, with Greggs already operating over 2,600 outlets and planning another 140–160 openings this year. Moreover, the food-to-go sector is becoming increasingly crowded, with healthier rivals vying for market share as well.
Building on this, Greggs may need to move with the times. Its indulgent baked goods core offering may simply fall (or be falling) out of fashion. And in our increasingly weight-obsessed nation, ultra-processed sausage rolls could become a thing of the past. As such, the trend toward healthier eating and increased nutritional awareness could limit demand for its classic products, while the sheer scale of its existing footprint constrains future store-led growth opportunities. Those, at least, are my concerns.
Reasonable value
Turning to valuation, Greggs’s declining share price has brought its forward price-to-earnings (P/E) ratio down to a more reasonable level. The stock now trades at 13.5 times expected 2025 earnings, falling further to 13.1 times in 2026 and 12.6 times by 2027, making it far less demanding than the 25 times multiples seen at its peak.
The dividend yield has also become more attractive. It’s currently standing near 3.9% and forecast to rise above 4% by 2027, reflecting ongoing payout increases. Greggs’ payout ratio has hovered around 45%–51% in recent years, suggesting a sustainable approach to distributions.
Net debt is expected to reach £344m by 2025, up from £124m in 2023. This is a factor to monitor but remains manageable relative to its earnings and cash flow generation. The consensus forecast suggests net debt will fall to £307m by 2027.
The bottom line
Greggs’s valuation doesn’t look as demanding as it once did, and the yield is appealing for anyone focused on income. It’s also a solid, well-run business with a strong brand. However, for me, it’s hard to get excited about it. Growth is slowing, the UK market feels pretty saturated, and consumer habits are shifting in ways that may not play in its favour long term. It’s definitely worth a look for the right kind of investor, but personally, I just think there are more promising opportunities out there.
