£10,000 invested in Greggs shares 15 years ago is now worth…

Greggs (LSE:GRG) shares have plummeted from their peaks in September. Down approximately 40%, the stock is among the worst performers on the FTSE 250. However, looking over 15 years, Greggs stock is up 335%. As such, a £10,000 investment then would now be worth £43,500. That’s clearly a decent return. For comparison, the average annual return for the stock market is typically around 7-10%. So Greggs’ performance is well above that average.

This kind of growth often suggests the company has consistently performed well, either through solid management, innovation, or taking advantage of market trends. If we look at the trajectory over the last 15 years, its business model has evolved. Innovations like the expansion of vegan and healthier menu options and its successful adaptation to consumer trends and preferences have been key.

A recipe for success

Over this long period, Greggs has demonstrated resilience and strategic foresight, particularly through its shift from a traditional bakery model to a food-on-the-go business. This transformation has driven significant revenue growth. Store earnings increased by 300% over the past decade, and the number of stores expanded from 1,487 in 2010 to more than 2,500 today.

The company’s strong financial health, marked by zero debt and consistent cash flow, has allowed it to fund its expansion without relying on external financing. This self-sustaining growth model has not only bolstered investor confidence but also positioned Greggs as a robust player in the fast-food industry. This draws comparisons to giants like Coca-Cola rather than traditional fast-food chains.

I have concerns

Some investors will likely see Greggs shares at the new lower share price and be interested. However, I’d suggest caution might be the best approach.

Firstly, sales growth is really slowing. Like-for-like sales in company-managed shops increased by just 1.7% year on year in the first nine weeks of 2025. This compounds the Q4 data in which we saw like-for-like sales grow by 2.5%.

This slowdown is compounded by rising costs, including the National Living Wage increase to £12.50 per hour. This is likely to pressure margins despite Greggs’ efforts to maintain “value leadership” through price stability. Additionally, rising National Insurance Contributions and high energy costs further complicate the company’s ability to sustain earnings growth.

In addition, I’m concerned that Greggs’ UK-focused model also faces saturation risks and intensifying competition from supermarkets’ meal deals. While the company thrived during austerity and the pandemic, it now struggles to maintain momentum.

Moreover, there’s a growing consumer trend towards healthier alternatives, which contrasts sharply with Greggs’ traditional offerings of pastries and baked goods. Although the company has introduced healthier options like pasta pots and salads, overcoming its historical association with less healthy food remains a challenge.

I’m in the minority

While I’m bearish on Greggs, or at least believe there are better investments elsewhere, institutional analysts broadly back the stock with seven Buy ratings, two Outperforms, two Holds, and two Sells. I could be wrong of course, and the company’s future could continue to be as bright as its recent past. Nonetheless, at 18.3 times forward earnings and a price-to-earnings-to-growth (PEG) ratio of 2.5, I believe the stock is overvalued. Dividend-adjusted metrics also suggest the stock is trading too high.

The post £10,000 invested in Greggs shares 15 years ago is now worth… appeared first on The Motley Fool UK.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More reading

James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended Greggs Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.