Greggs (LSE: GRG) has been a high performer on the FTSE 250 during the last decade. Throughout that point, its shares have climbed a powerful 491.5%. By comparability, the index is up 31.5% throughout the identical interval.

This yr they’ve carried on that positive kind. The place the FTSE 250’s up 7.3% yr so far, Greggs has risen 21.3%.

I’ve been retaining a detailed eye on the inventory. And its sturdy efficiency has me pondering whether or not now’s the best time for me to sink my tooth in and add it to my portfolio. Let’s delve in.

Room for extra development?

There are a few methods I can go about exploring whether or not Greggs could be a shrewd addition to my holdings at this time. The primary is by wanting on the inventory’s valuation.

Whereas there are a number of valuation metrics I might use, I’m choosing the important thing price-to-earnings (P/E) ratio. As seen under, Greggs’ present P/E is 23.7.

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Contemplating the FTSE 250 common is round 12, Greggs appears on the costly facet. Wanting forward tells an identical story. Because the chart under highlights, its ahead P/E is 21.3.

One other metric I can use is the price-to-sales (P/S) ratio. this, Greggs seems barely higher worth for cash. As seen under, its present P/S is 1.7. That’s round consistent with its 10-year median.

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Extra to think about?

However except for its valuation, what else is there to think about? Effectively, as an revenue investor, I’m all the time eager to see if a inventory presents the potential to offer passive revenue.

Greggs does. The inventory has a yield simply shy of two%. That’s under the FTSE 250 common of three.3%. However its payout has been steadily on the rise and there’s a lot to counsel it might preserve heading upwards. To start out, the enterprise lifted its interim payout by 3p to 19p per share, an 18.8% rise from final yr.

Unimaginable development

On high of that, it’s tough to disregard the good development Greggs has posted lately regardless of the continued cost-of-living disaster.

For the primary half of the yr, gross sales rose by practically 14% to £960.6m. Alongside that, revenue earlier than tax jumped by over 16% to £74.1m.

That builds on its stable kind from final yr, the place whole gross sales rose by practically 20% to £1.8bn and revenue earlier than tax climbed by 13% to £167.7m.

I’m not bought

With that development, Greggs has massive plans for enlargement. Within the years to return, administration’s aiming to extend its whole variety of shops to three,500, a big enhance from the two,500 it has at this time. This yr, it has its sights set on opening up to 160 new branches.

However as an investor who buys shares with the intention of holding them for many years, there’s one main concern of mine with Greggs. I can’t assist however really feel just like the agency’s swimming towards the tide in relation to wholesome consuming habits.

Many shoppers are actually centered greater than ever on what they put of their our bodies. And Greggs’ ultra-processed meals doesn’t precisely bode nicely for a wholesome way of life.

Even regardless of its rise, that, coupled with its excessive valuation, put me off the inventory. I’ll be retaining it on my watchlist for now.