Financial Trading Blog
Stock of the day 24/02/2016 – Greggs PLC
2015 ended up being a pretty fantastic year for Greggs; despite suffering the same slump as most of the markets between August and October the UK’s largest bakery chain still closed out New Year’s Eve at £13.09, nearly double its year starting price of £7.34 and only a smidge below the £13.69 all-time high struck at the end of July.
Yet things didn’t get off to the greatest start for Greggs in 2016. The general bearishness that plagued early January took some of the shine off the stock, sending it to the low £12’s after a week and a half. However, the real kicker came in the middle of the month, as Greggs revealed its post-Christmas update.
(Source: IT-Finance.com 24/02/2016)
For the final quarter of 2015 the bakery chain posted a respectable 2.3% growth in like-for-like sales, figures that, in contrast to many of its high street peers, you could only accuse of being sturdy at worst and fairly impressive at best. Yet compare that growth the 5.6% expansion seen throughout the rest of the year and the issue becomes clearer, with Greggs, like many companies, blaming a drop in high street foot fall for the relative decline. Investors were so spooked by the slowdown that they sent Greggs nearly 15% on the day of the update, leading the stock to hit a 10 month low of £9.52 a few days later.
Since then the stock has broadly risen and fallen in line with the market, struggling to break too far beyond the £10.50 mark. Most recently the company revealed it intends to aggressively in Northern Ireland, aiming for complete UK pastry dominance by increasing its presence in the country from 1 to 51 locations. That news gave the stock a slight bump higher, leaving Greggs at a current trading price of £10.35 (IT-Finance.com, 24/02/2016).
In terms of Greggs’ full year results next Tuesday the company remarked in January that it was on track to meet expectations, analysts forecasting a 24.5% increase in pre-tax profit to £72.6 million.
Greggs PLC has a consensus rating of ‘Buy’ with an average target price of £11.22.
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