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After a long time in the doldrums, Greggs (LSE: GRG) shares are seemingly back in demand. As I type this, the FTSE 250 business’s value is up by 14% on the day (29 July)! This follows the release of its latest set of interim numbers.
What’s suddenly going so right for the ‘food on the go’ retailer?
Profit soars
Based purely on the headline numbers, you can see why the market is so excited.
Total sales rose 7.2% to £1.1bn in the first six months of 2026. Pre-tax profit came in at £76m — a near-20% increase on the £63.5m achieved in the same period a year earlier. It also beat expectations.
A fair amount of this growth was attributed to two things.
The first of these was the expansion of its grocery retailing division following partnerships with retailers such as FTSE 100 giant Tesco.
The second reason was the opening of net 34 new stores in the first six months of the year. This brings the company’s total estate to almost 2,800 sites with “clear opportunity for at least 3,500 UK shops over the longer term“. The opening of its first international travel hub shop at Tenerife South Airport also seems to have gone down well.
Has anything changed?
As wonderful as today’s move has been for new(ish) holders, it’s worth remembering that Greggs shares once traded around the 3,000p mark. So, anyone buying at the end of July a couple of years ago would still be very much underwater.
The question I’m asking is whether the stock is able to reach similar heights again, especially as many of the concerns around the company remain. Household budgets remain stretched and competition is fierce. The popularity of weight-loss drugs and the impact this could have on trading is another example.
One also needs to consider temporary issues, such as the weather. I wouldn’t be surprised if the multiple heatwaves we’ve experienced in the UK are having some kind of impact. Who wants to chomp down on a hot pasty when they’re already sweating buckets?
My verdict on Greggs shares today
I’ve been waiting patiently for signs that Greggs shares (which I once held) might be entering a period of sustained positive momentum. Considering the lack of upgrade to guidance, I’m not sure we’re quite there.
Looking ahead, the baker indicated that 2026 underlying pre-tax profit will be similar to the £172m achieved in 2025 and that its performance in the second half of the year would be impacted by higher costs. That doesn’t sound like a recipe for a rapid recovery to me. In fact, I wonder if a lot of today’s jump is down to short sellers rushing to close their positions.
Even so, a price-to-earnings (P/E) ratio of 14 before markets opened was hardly excessive. And while there was no change to the interim dividend (19p per share), analysts had the stock yielding over 4% before the opening bell. Combine this with the ongoing investment in its supply chain infrastructure, and I’m decidedly more bullish than bearish.
With this in mind, I’m considering getting some exposure again. But I’m also not convinced it’s time to bet the house just yet.
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Paul Summers has no position in any of the shares mentioned.
This story originally appeared on Motley Fool
