£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) |
EBITDA (£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
Sector |
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| Consumer |
Share price graph
Balance sheet |
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|---|---|
| Forecast net cash (£m) | 59.8 |
| Forecast gearing ratio (%) | N/A |
Price performance
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1m |
3m |
12m |
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Key management |
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| Roger Whiteside | CEO |
| Richard Hutton | FD |
