greggs - good time to buy ?

[jackdaww]

greggs SP dropped 15% today - seemingly on a cautious outlook .

i am a long term holder .

with unusually beneficial timing , i sold a tranche yesterday at 1255 for accounting reasons.

so ive bought them back again today at 1066 , and added some .

[AleisterCrowley]

You'd think a 'cold snap' would have a net positive effect on Greggs' sales.
I know they had to shut a few stores, but think of all the extra steak slices and pasties they must have sold

[gbjbaanb]

cold snap means nobody goes out, so netflix does well, but all the retail shops do badly.

Now its sunny, people will be out and will be grabbing a sausage roll as they tootle round the shops looking at stuff they won't buy.

[Pendrainllwyn]

Also article in today's FT saying there would be more bad news to come and too early to buy

[JMN2]

Here in North East on my high street Pret a Manger shut down recently but Greggs (which are everywhere) seems to be doing great. Ham and cheese baguette didn't taste as good as the Pret one but was an overall winner due to the lower price.

[simoan]

Also article in today's FT saying there would be more bad news to come and too early to buy

Personally, I would pay zero attention to what a journalist thinks. They have an appalling record of making predictions about the future of anything and you may as well toss a coin to make investment decisions than give them the time of day.

You really need to do your own analysis and decide whether the fundamentals stack up and Greggs (or any other share) meets your own investment criteria. One of the most important for me is the track record of the management. You can easily go back through RNS'es to read previous trading statements and results announcements to see how accurate and reliable their outlook comments have been in the past. The tone of the announcements is also important. You can get a picture. If it looks good then you can pretty much rely on the management outlook and ignore most other commentators.

FWIW I have no interest in Greggs although it looks safe as houses - decent balance sheet with net cash and a high ROCE which is a first up sign of decent management. It fails a few of my tests, most of all capex eats too much operating cashflow for my liking and not a large enough percentage of earnings are converted into cash.

All the best, Si

[Pendrainllwyn]

I do my own analysis thank you. I don't often read the FT or other financial press - just happened to today as I was flying - got upgraded to first class which is always a pleasant surprise . I was just sharing ...

Pendrainllwyn

[simoan]

I do my own analysis thank you. I don't often read the FT or other financial press - just happened to today as I was flying - got upgraded to first class which is always a pleasant surprise . I was just sharing ...

Pendrainllwyn

That's fine, but you didn't mention why they felt there was more bad news to come and it's too early to buy? That at least would have been helpful to anyone reading this thread who holds Greggs shares or is thinking of buying, particularly since most of us can't access the FT online. It was probably the journo that normally does the horoscopes standing in for the investment columnist for the day

Greggs has always struck me as expensive for a mature chain of pasty and cake shops. How much further can they expand to continue growth? What should really happen now is that they stop growing and throw off cash in the shape of dividends, but that's unlikely to happen as the rating is too high for an ex-growth company. If it was on a P/E of 12 with a similar P/FCF and a dividend > 4% it would be a sound share to hold. Management seem to have transitioned the business well in the past few years to counter the competition from the big coffee shops but will likely to have to do so again at some point. This will mean more capex to refresh and update the shops and so I don't really see any attraction currently.

All the best, Si

[jackdaww]

Greggs has always struck me as expensive for a mature chain of pasty and cake shops. How much further can they expand to continue growth? What should really happen now is that they stop growing and throw off cash in the shape of dividends, but that's unlikely to happen as the rating is too high for an ex-growth company. If it was on a P/E of 12 with a similar P/FCF and a dividend > 4% it would be a sound share to hold. Management seem to have transitioned the business well in the past few years to counter the competition from the big coffee shops but will likely to have to do so again at some point. This will mean more capex to refresh and update the shops and so I don't really see any attraction currently.

All the best, Si

====================

greggs shares were expensive when i bought in at about £4 , and probably were expensive long before that .

this is a simple well run company thats been around long enough for the market to put a value on it .

maybe the market is right?

the long queues could possibly be managed better by using mcdonalds type ordering screens.

i hope there is more to come.

[simoan]

greggs shares were expensive when i bought in at about £4 , and probably were expensive long before that .

this is a simple well run company thats been around long enough for the market to put a value on it .

maybe the market is right?

the long queues could possibly be managed better by using mcdonalds type ordering screens.

i hope there is more to come.

I think it's OK for a company to be "expensive" whilst it is still growing strongly as Gregg's probably was when it was £4. But now it is a much larger company which has almost saturated the UK and so can't simply grow by adding new shops. In particular, if it has too many shops in the same town it will likely just cannibalise it's own sales. So there comes a point when getting bigger by adding shops is actually bad for business!

I believe they could eke more out of what they already have. If you look at the current ratio it is quite high compared to other food and beverage outlets who are basically funded by their suppliers i.e. they could decrease working capital further if needed to improve returns. However, this is yet another sign of a solid, conservatively managed business.

All the best, Si

[Wasron]

I looked and regrettably failed to buy at £4 a share nearly five years ago. I think a lot of the recent growth has come from their move into motorway service stations. It was inspired.

[jackdaww]

i wonder why greggs dont do burgers ... or chips ...

[JMN2]

I looked and regrettably failed to buy at £4 a share nearly five years ago. I think a lot of the recent growth has come from their move into motorway service stations. It was inspired.

Same here. A friend asked me what I thought and I had just read a negative article in IC...missed that boat.

[Pastcaring]

Oh simoan that is harsh,giving astrologers a bad name.

I' d have thought the journo doing the horse racing tips would be standing in for the share tipster.

[gbjbaanb]

I looked and regrettably failed to buy at £4 a share nearly five years ago. I think a lot of the recent growth has come from their move into motorway service stations. It was inspired.

they're also getting into frozen food, you can buy their pastry stuff in Iceland now (and it works as they are just as good when heated up in my own oven).