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Greggs is still growing, growing, growing

The baker's range of healthy meals and breakfast options is still proving wildly popular with customers
August 2, 2016

Shares in bakery business Greggs (GRG) have had a rocky road post-referendum, so a solid set of interim results is just what investors needed. Like-for-like sales rose 3.8 per cent during the first half of the financial year, which was a decent performance against a tough comparable (5.9 per cent in the first half of 2015), and factoring in particularly poor weather in June.

IC TIP: Buy at 1,057p

Total sales grew by 6 per cent to £422m - ahead of brokerage Peel Hunt's expectations - reflecting the opening of 32 net new stores and growing demand for the group's 'balanced choice' healthy food range and breakfast menu. On a net basis, 70 stores should be opened over the entire financial year, which would give the company close to 1,800 operating sites.

In the first six months the group made a gain on property disposals of £2.2m, but even excluding this helpful bump operating profits increased by 6.7 per cent to £27.2m. That adjusted figure also excludes costs associated with Greggs' plan to close three manufacturing sites this year; £4.8m worth of one-off expenses were recognised in the first half, with £2.8m expected to be booked subsequently.

Analysts at Peel Hunt expect pre-tax profits of £78.4m for the year ending December 2016, giving EPS of 59.2p, up from £73m and 55.8p in 2015.

GREGGS (GRG)
ORD PRICE:1,057pMARKET VALUE:£1.07bn
TOUCH:1,054-1,060p12-MONTH HIGH:1,359pLOW: 869p
DIVIDEND YIELD:2.9%PE RATIO:19
NET ASSET VALUE:244pNET CASH:£35m

Half-year to 2 JulyTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201539825.620.07.4
201642225.419.79.5
% change+6-1-2+28

Ex-div: 8 Sep

Payment: 7 Oct