Up until very, very recently, the food retailer was having a pretty awful 2018. Opening at an effective all-time high of £14.07, the stock immediately began to fall, a decline that sped up following a poorly received set of full year figures at the end of February. It then trod water over much of spring, only to suffer a 15% single session slide in the aftermath of early May’s Q1 update.
Investors took issue with the fact Greggs(LON:GRG) said annual profits would be about the same as the previous year’s £81.8 billion. That’s a decent chunk lower than the £87 million expected by analysts, with the company blaming the ‘Beast from the East’ for the stagnation. The firm continued to drift lower as summer got underway, a decline that eventually culminated in a 19 month nadir of £9.42 in late-July.
Yet, just one week on from that low the stock was back on the up and up as investors processed the company’s interim results. Total sales jumped 5.2% to £476 million, with company-managed shop like-for-likes rising 1.5%, boosted by the successful expansion of its breakfast, hot food and healthier choices offerings. Reported pre-tax profit including property profits and exceptional charges, meanwhile, rose 24% to £24.1 million.
Interestingly, the company didn’t actually revise its outlook, stating that it remains ‘cautious’ given the consumer backdrop, and that underlying profits ‘are likely to be at a similar level to 2017’. However, investors were more receptive to the positive headline figures this time out, lifting the stock back above £10 and beyond. Greggs now sits at a current trading price of £10.52.
In terms of Tuesday’s Q3 statement, investors will be looking for an improvement in the company’s like-for-like sales now that they aren’t weighed down by the first half’s cold snap, as well as a revision to its full year guidance.
Greggs (LON:GRG) has a consensus rating of ‘Hold’ alongside an average target price of £11.86.
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