Greggs (LSE: GRG) shares are sitting well below their 52-week high of 1,982p, requiring a 21.4% rise from current levels to get back there.
The bakery chain’s valuation has come under sustained pressure since early June 2025, leaving investors watching closely for any signs of a meaningful recovery.
Full-year results released in March 2026 showed statutory pre-tax profit down sharply, driven by a combination of factors that rattled market confidence in the stock.
Subdued UK consumer confidence weighed on footfall, while rising input costs squeezed margins across the business during the period.
A noticeable shift toward smaller portions, partly linked to increasing weight-loss medication use among consumers, also contributed to the earnings pressure facing the company.
Heavy investment in new supply chain capacity added further strain, with capital expenditure reaching £287.5m in 2025 before any meaningful financial payoff from those facilities arrived.
Despite the share price weakness, Greggs has continued expanding its physical footprint, growing its estate past 2,750 locations across the UK.
Like-for-like sales growth accelerated to 3.3% in the 10 weeks to 9 May, up from 2.5% earlier in the year, with April’s launch of the Chicken Roll proving a genuine customer favourite.
Chief Executive Roisin Currie struck a confident tone about the year ahead, stating: “We made good progress in 2025, in a challenging year where subdued consumer confidence impacted the food-to-go market. We enter 2026 with a strong pipeline of new opportunities to make Greggs even more convenient for customers.”
Capital spending is forecast to fall from £287.5m in 2025 toward £200m this year, with further reductions to £150m-£170m expected from 2027 onwards.
That easing in expenditure should free up cash and support return on capital as newer sites mature and begin contributing more meaningfully to overall performance.
At a price-to-earnings ratio of 13.7, the market is not currently pricing in much of a recovery, which some analysts argue could represent an opportunity if sales momentum continues building.
The company still needs to successfully deliver its new Derby and Kettering facilities as concrete proof that capital expenditure is genuinely declining and future capacity is being secured.
Geopolitical risks remain a concern, with a prolonged Middle East conflict potentially pushing input costs higher than the 3% currently assumed in forecasts.
Consumer confidence could also remain weak for longer than anticipated, dampening sales growth and making it harder for the business to close the gap to its previous valuation.
Greggs currently offers a 4.2% dividend yield, providing some income support for shareholders willing to hold through the uncertain near-term trading environment.
Closing the gap to the 52-week high is not considered unrealistic by some observers, though it depends heavily on management continuing to execute its strategy with discipline.
Further evidence of accelerating like-for-like sales growth over at least another quarter would give investors more confidence before committing fresh capital to the stock.
