£2114.2m market cap

2090p last close

With 1,969 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

An unscheduled trading update confirming exceptional 11.1% like-for-like (l-f-l) sales growth in the first 19 weeks of FY19, and a fourth earnings upgrade in six months is testament to Greggs’ outstanding progress on the repositioning of the brand as a leading food-on-the go-format. We increase our FY19 and FY20 underlying PBT forecasts by 9%. The company is highly cash generative and likely to distribute part of the substantial cash balance (FY19e: £102.6m) with the H119 dividend.

Y/E Dec
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 960.0 135.7 81.8 64.5 32.4 15.6
2018A 1029.3 145.7 89.8 71.1 29.4 13.8
2019E 1159.5 223.5 107.7 84.8 24.6 12.9
2020E 1234.2 240.8 116.6 92.7 22.5 12.1
Last updated on 23/05/2019
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. In August 2018 Costa was sold to Coca-Cola for 16.4x EBITDA. 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 23/05/2019
Share price graph
Balance sheet
Forecast net cash (£m) 102.6
Forecast gearing ratio (%) N/A
Price performance
Actual 15.0 16.9 99.1
Relative* 19.6 16.3 115.2
52-week high/low 2180.0p/942.0p
*% relative to local index
Key management
Roger Whiteside CEO
Richard Hutton FD

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