Greggs shares: here are the latest growth and dividend forecasts
Greggs (LSE:GRG) shares fell sharply in 2025 and have started this new year on the back foot too. Down 3% since 1 January, the FTSE 250 baker’s now dropped 24% in value during the last 12 months.
Greggs’ share price slump reflects its fall from favour as one of the UK’s hottest growth stocks. Sales have slowed to a crawl as money-conscious shoppers have cut spending. And with costs rising, profits have taken a substantial hit.
However, most recent trading numbers showed a clear improvement in company sales. The question is, can the battered business bounce back this year?
Tipped for a recovery
A look at Greggs’ profits and dividend forecasts could yield some clues on where it’s heading next.
City analysts believe the firm’s earnings will recover slightly in 2026, rising 2%. That’s following a 17% drop for last year that it’s expected to report on 3 March. Growth is expected to pick up to 5% in 2027.
As with profits, the number crunchers are predicting a declining dividend for 2025, to 67.5p per share from 69p. But with earnings tipped for a modest recovery, they also think they’ll rise from this year onwards.
Payouts of 68.4p and 70p per share are tipped for 2026 and 2027 onwards. But how realistic are all of these forecasts?
However…
As much as Iâd like to believe them as a Greggs shareholder, Iâm not sure these estimates are especially robust.
I’m not saying the baker won’t hit these targets. Like-for-like sales growth in Q4 was 2.9% from company-managed stores, better than the 2.4% in the first nine months. Trading could keep improving, too, as falling interest rates boost consumer spending power.
In this respect, current earnings forecasts look pretty achievable. However, with the cost-of-living crisis rolling on and the British economy struggling for growth, nothing is guaranteed.
Those dividend forecasts to 2027 also appear a bit touch-and-go. Predicted payouts are covered 1.8 times for both of the next two years. This is below the security watermark of 2 times and above, and leaves little wiggle room if profits indeed miss the target.
Are Greggs shares a Buy?
So does this make the FTSE 250 stock one to avoid? Not at all. For long-term investors, I believe the baker’s actually worth consideration as a recovery stock.
Today it trades on a forward price-to-earnings (P/E) ratio of just 13.1 times. This is bargain-basement territory, in my opinion — the 10-year average sits substantially higher at roughly 23.
My view is that Greggs’ share price will rebound sharply when consumer conditions eventually improve. Its sweet and savoury treats remain timeless favourites, and work to innovate its menu should help the baker navigate changing consumer tastes.
Furthermore, I’m confident its ongoing store expansion programme will deliver significant benefits over time. This includes a greater focus on higher-footfall travel locations and more franchise stores.
It may not happen straight away. But on balance, I’m confident Greggs shares will bounce back strongly from current levels.
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Royston Wild has positions in Greggs Plc. 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.
