What Investors Got Wrong Before Greggs' Rally

If Greggs was on your watchlist instead of in your portfolio, the past year may feel like a painful what if. For Greggs shareholders, the return over the past year was 43.2%, including dividends. That outcome sits against a backdrop where analysts already disagreed on whether expanding drive thrus, digital ordering and new formats could support growth despite margin pressure. What signals in that debate could have helped you judge whether Greggs’ expansion plans were opportunity or overreach?

Greggs has already moved. See which of 9 high quality undervalued stocks still trade below our estimates.

The Two Greggs Stories Investors Had To Weigh

The shares cost £16.3 at the start of the period, and anyone looking at Greggs then had to decide which story felt more realistic.

The bullish view argued that expansion into drive thrus and other convenience locations, plus heavier use of digital ordering, could support higher sales. That side saw a Fair Value of £20.66, a notional price implied by its assumptions, with vertical integration and new logistics hubs expected to help protect margins.

The bearish camp focused on UK quick service saturation and rising regulation. Health concerns, tighter environmental rules and higher input costs were all treated as real risks, leading to a Fair Value estimate of £13.3 based on more cautious earnings and margin assumptions.

What The Evidence Around Greggs Actually Tested

The clearest new data point was Greggs planning four factory closures and about 740 job cuts while consolidating production. This leaned toward the bullish story that vertical integration and new hubs could support efficiency. At the same time, H1 2026 showed revenue at £1,101.5m and net income at £56.2m, with net margin at 5.1%. The period cut both ways.

The key lesson is to track whether an expansion story lines up with factory footprints and profitability. For other retailers, compare shop openings, restructuring moves and reported net margin to see if efficiency claims are actually landing in the numbers.

What Greggs' Recent Run Already Prices In

Greggs now trades at £22.62. The selected Narrative sees its Fair Value below that level, even while arguing that new channels, digital ordering and supply chain projects could still support the business case.

For today’s price to hold up, a buyer needs confidence that cost inflation and slower like for like volumes do not drag margins steadily lower.

"Stagnant demand, rising input costs, limited market presence, climate risks, and shifts in consumer preferences threaten Greggs' growth, margins, and long-term relevance."

One Narrative disagrees with today's price. → See where this Narrative says Greggs should trade

Looking Past Greggs To One Rival

Greggs leans on drive thrus, value and digital ordering to keep customers coming. You could look one step sideways.

Another global chain is pushing a single app, loyalty program and targeted offers. That toolkit aims to keep guests returning more frequently.

It focuses on value menus that speak directly to lower income diners. In tougher months, those bundles can matter more than branding.

The same operator is investing in new outlets, remodels and beverage counters. If those formats reset everyday convenience, Greggs’ playbook may not be the only one worth watching.

One Narrative has already put a figure on it. → Uncover the company trading 18% below one Narrative's Fair Value

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com