£2452m market cap

2424p 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 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)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 960.0 135.7 81.8 63.5 38.2 18.1
2018A 1029.3 145.7 89.8 70.3 34.5 16.0
2019E 1171.6 231.5 112.7 87.7 27.6 14.4
2020E 1251.2 244.3 119.1 94.4 25.7 13.6
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 17/01/2020
Share price graph
Balance sheet
Forecast net cash (£m) 64.4
Forecast gearing ratio (%) N/A
Price performance
Actual 7.4 28.8 62.0
Relative* 5.4 20.1 43.0
52-week high/low 2476.0p/1545.0p
*% relative to local index
Key management
Roger Whiteside CEO
Richard Hutton FD

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