£2116.2m market cap
2092p last close
With 2,009 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’ trading update for the first six weeks of Q419 highlights an improvement in sales growth. Like-for-like (l-f-l) sales growth of 8.3% follows 7.4% in Q319 and is against a tougher comparative, allaying fears about Greggs’ sales momentum. We upgrade our l-f-l sales forecast for FY19 by 70bp to 8.6% growth, which feeds through to PBT forecasts increasing by 4.6% in FY19 and 2.8% in FY20. Our DCF-based valuation increases to 2,091p.
Y/E Dec |
Revenue (£m) |
EBITDA (£m) |
PBT (£m) |
EPS (p) |
P/E (x) |
P/CF (x) |
|---|---|---|---|---|---|---|
| 2017A | 960.0 | 135.7 | 81.8 | 63.5 | 32.9 | 15.6 |
| 2018A | 1029.3 | 145.7 | 89.8 | 70.3 | 29.8 | 13.8 |
| 2019E | 1164.7 | 231.7 | 112.9 | 87.9 | 23.8 | 12.4 |
| 2020E | 1244.6 | 244.4 | 119.1 | 94.4 | 22.2 | 11.8 |
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 06/12/2019
Sector |
|---|
| Consumer |
Share price graph
Balance sheet |
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|---|---|
| Forecast net cash (£m) | 64.2 |
| Forecast gearing ratio (%) | N/A |
Price performance
% |
1m |
3m |
12m |
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Key management |
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|---|---|
| Roger Whiteside | CEO |
| Richard Hutton | FD |
