£2407.5m market cap
2368p last close
With 2,050 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 finished 2019 with accelerating revenue growth. It continues to benefit from increasing customer growth as the brand strengthens and it takes share in the ‘food-on-the-go’ market. With increased cost pressures, management remains confident of mitigating these through ongoing business efficiencies and select price increases, where possible, and some one-off benefits. Our forecasts, which are at the high end of consensus, are broadly unchanged. Our DCF-based valuation is 2,096p.
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 | 37.5 | 17.8 |
| 2018A | 1029.3 | 145.7 | 89.8 | 70.3 | 33.9 | 15.7 |
| 2019E | 1171.6 | 231.5 | 112.7 | 87.7 | 27.1 | 14.1 |
| 2020E | 1251.2 | 244.3 | 119.1 | 94.4 | 25.2 | 13.4 |
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 23/01/2020
Sector |
|---|
| Consumer |
Share price graph
Balance sheet |
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|---|---|
| Forecast net cash (£m) | 64.4 |
| 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 |
