Greggs (LSE:GRG) is about to offer a buying and selling replace on Tuesday (20 Might). And I feel buyers have causes to be optimistic about what the FTSE 250 firm goes to say.

Up to now, the inventory has fallen round 30% because the begin of the yr. However I’ve seen current indicators issues is likely to be about to look up – no less than within the brief time period.

Why has the inventory been falling?

At first sight, it’s not solely apparent why the inventory has been falling. Complete gross sales in 2024 grew 11%, pre-tax income had been up 13%, and earnings per share climbed 11% – that’s good, proper?

Effectively sure, however whereas the headline information is sweet, there are some barely regarding facets. One is that round half of that development got here from opening new shops, which the agency can’t do ceaselessly.

Like-for-like gross sales (which measures revenues adjusted for modifications in retailer depend) got here in at 5.5%. And the even greater concern is that this collapsed to only 1.7% within the first 9 weeks of 2025. 

That’s not good in any respect and I feel it’s the primary cause the inventory has been falling in 2025. However there are indicators issues might need been enhancing over the past couple of months.

Optimistic indicators

It’s not simply Greggs that has been scuffling with weak gross sales lately. The UK excessive road on the whole suffered from an absence of footfall within the final quarter of 2024. 

One cause for this was unusually dangerous climate. That may sound like an unbelievably dangerous excuse, however a number of corporations have mentioned it made a distinction to their outcomes in the direction of the top of 2024.

For no matter cause, fairly a couple of companies have been reporting extra optimistic ends in 2025. One instance is JD Wetherspoon, the place unusually good climate has been getting folks to the pub.

Whether or not it’s the solar or one more reason, buying and selling situations appear to be enhancing. In consequence, I feel Greggs may properly report like-for-like gross sales development of greater than 1.7% and the inventory may rise consequently.

Lengthy-term investing

Greggs has posted a few disappointing reviews this yr, however I’m anticipating a stronger one within the coming week. The massive query for buyers, although, is what the long-term future appears to be like like.

The previous couple of months have illustrated the agency’s dependence on excessive road footfall. Given this, perhaps the unpredictable nature of the UK’s climate is a danger to be taken critically. 

In any occasion, like-for-like gross sales development goes to find out the corporate’s success over time. And it’s additionally going to be key to funding returns. 

At a price-to-earnings (P/E) ratio of round 13, the agency may not want to realize a lot by way of development to be a great funding. So long-term buyers would possibly suppose it’s price a more in-depth look.

A inventory to purchase now?

I’m a giant fan of corporations that supply their clients higher worth than their rivals and that is definitely true of Greggs. Importantly, the agency has the economies of scale to again up its low-cost choices.

I feel that may very well be a resilient enterprise mannequin over time and it’s price contemplating at in the present day’s costs. But when – as I’m anticipating – the inventory begins to bounce again on Tuesday, it may very well be a unique story.