£2419.7m market cap

2392p last close

With 1,969 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 has delivered exceptional 11.1% like-for-like sales growth in the first 19 weeks of FY19, a further improvement on impressive growth of 9.6% in the first seven weeks of the year. We upgrade our FY19 and FY20 underlying PBT forecasts by 9%. The company is highly cash generative and is expected to distribute surplus cash in excess of £40m (FY19e: £102.6m) in the form of a special dividend in addition to the H119 dividend.

Y/E Dec
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 960.0 135.7 81.8 64.5 37.1 17.9
2018A 1029.3 145.7 89.8 71.1 33.6 15.8
2019E 1159.5 223.5 107.7 84.8 28.2 14.8
2020E 1234.2 240.8 116.6 92.7 25.8 13.8
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 25/07/2019
Share price graph
Balance sheet
Forecast net cash (£m) 102.6
Forecast gearing ratio (%) N/A
Price performance
Actual 4.6 30.6 152.9
Relative* 3.5 30.0 159.9
52-week high/low 2476.0p/950.0p
*% relative to local index
Key management
Roger Whiteside CEO
Richard Hutton FD

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