£1801.6m market cap

1756p last close

With over 1,950 retail outlets, eight manufacturing and distribution centres and 22,000 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

After only seven weeks, Greggs’ vegan sausage roll has already led us to an upgrade, our third in two months. With its smart approach to social media, the company is succeeding in disrupting out-of-date perceptions, which appears to be bringing new customers into the stores. While multiples are optically high, we believe there may be further upgrade potential.

Y/E Dec
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2016A 894.2 125.9 80.3 62.0 28.7 13.4
2017A 960.0 135.7 81.8 64.5 27.6 13.3
2018E 1029.3 144.6 89.2 70.2 25.4 12.6
2019E 1120.8 165.1 102.8 80.8 22.0 10.7
Last updated on 20/02/2019
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 20/02/2019
Share price graph
Balance sheet
Forecast net cash (£m) 48.8
Forecast gearing ratio (%) N/A
Price performance
Actual 14.2 45.6 35.8
Relative* 11.1 42.9 38.4
52-week high/low 1781.0p/942.0p
*% relative to local index
Key management
Roger Whiteside CEO
Richard Hutton FD

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