Source: Sharecast
Greggs reported positive strategic progression on Tuesday, in Berenberg's view, noting that while like-for-like and total revenues were pre-reported in an update earlier in July, profitability outcomes had not been. Management reported group adjusted pre-tax profits of £63.5m, which reflected a 3% beat versus consensus estimates.
Despite this, Berenberg noted that Greggs' shares traded roughly 5% lower on insignificant trading news, leading to a further deterioration in what it said was a share price that already reflected "subdued sentiment".
"We continue to think that the fundamentals of the equity story are detached from the current valuation multiple, which seems to infer imminent store estate saturation without sufficient cause, in our view," said the German bank. "We have made insignificant changes to our earnings forecasts. We have increased our FY 2026E adjusted operating profit expectation marginally, to reflect the reversion of the hot weather impact to June 2025, and have tweaked our net interest and tax charge forecasts to reflect H1 outcomes and guidance commentary."
Berenberg, which reiterated its 'buy' rating on the stock, added that Greggs currently trades on a 12.5x 12-month forward price-to-earnings ratio, more than one standard deviation below its trailing three-year historical average.
Reporting by Iain Gilbert at Sharecast.com