£2016m market cap

1993p last close

With 1,984 shops, eight manufacturing and distribution centres and 23,000 employees, Greggs is the UK’s leading ‘food-on-the-go’ retailer. It uses vertical integration to offer differentiated products at competitive prices.

Investment summary

Greggs has delivered strong H119 results with record revenue growth, which has led to a good improvement in the operating margin, driven by mostly sustainable gross margin improvements and good control of other operating costs. H119 LFL revenue grew 10.5%, the gross margin improved by 230bp, and the operating margin improved by 260bp, resulting in 57% growth in PBT y-o-y. Our forecasts are broadly unchanged following four upgrades in six months. Greggs is highly cash generative, as evidenced by the special dividend announced with the H119 results.

Y/E Dec
Revenue (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2017A 960.0 135.7 81.8 63.5 31.4 14.9
2018A 1029.3 145.7 89.8 70.3 28.3 13.2
2019E 1156.9 226.8 107.9 84.0 23.7 12.2
2020E 1236.3 241.0 115.8 91.7 21.7 11.5
Last updated on 16/09/2019
Industry outlook

Greggs enjoys an expanding market. The Project Café2017UK report (Allegra World Coffee portal) valued the UK coffee shop market in 2016 at £8.9bn, +12% y-o-y, with branded outlets accounting for £3.7bn. Allegra estimates it could reach £16bn by 2025. The squeezed consumer is a potential concern, although Greggs is well placed for the value switch after widespread refurbishments and extended customer options as it moves to widen its market.

Last updated on 16/09/2019
Share price graph
Balance sheet
Forecast net cash (£m) 59.8
Forecast gearing ratio (%) N/A
Price performance
Actual (1.0) (11.3) 83.7
Relative* (4.4) (11.7) 84.1
52-week high/low 2476.0p/1006.0p
*% relative to local index
Key management
Roger Whiteside CEO
Richard Hutton FD

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