After a flaky couple of years, the Greggs (LSE:GRG) share price has started to get its mojo back. Today (30 September), it jumped 7.7%, rising above 2,000p for the first time since July.
This means Greggs stock is up 42% since bottoming out at just above 1,400p in November 2025. For context, the index to which the pasty maker belongs — the FTSE 250 — is only up 14.7% over this time.
Still, Greggs remains well below the 3,172p its shares reached in August 2024. Could this FTSE 250 stock deliver tasty gains in the years ahead?
Solid update
Today’s jump came after the company released a promising Q3 trading update. Total sales rose 7.7% for the 13 weeks to 26 September, and 7.4% for the 39 weeks to 26 September.
Like-for-like (LFL) sales in company-managed shops increased 3.4% in the quarter, up from 2.1% in the first half of the year. This boosted LFL sales for the 39 weeks to 2.6%. These figures were ahead of market expectations.
Greggs attributed this performance to two things: more settled weather in August and September and new product launches, including the Steak & Stilton Bake and Matcha drinks. It’s also selling more salads to consumers focused on healthier diets, as well as protein-led options for people taking weight-loss treatments.
The company said: “Improved trading performance in recent months and continued strong cost control leads us to expect a modestly improved outcome for 2026“. This sentence was probably the main catalyst for today’s share price rise.
Challenges ahead
Might we see a £1.50 sausage roll across the UK next year? It’s possible, as the company warned that cost pressures will likely rise in 2027 as inflation bites.
Then again, a £1.50 sausage roll would arguably still represent a bargain compared to the £3.75 Cake Pop treat I recently bought for my daughter in Starbucks!
Jokes aside, more consumers are set for a tough winter as energy bills rise further and fuel prices remain elevated. So challenges definitely remain for the business.
Greggs also warned that overheads related to its two new distribution centres in Derby and Kettering will increase next year. However, once up and running, these state-of-the-art facilities will contribute to profitable growth.
Finally, four production sites could be closed, leading to around £20m in annualised savings, starting in 2028. Sadly, some 740 roles could be made redundant moving forward.
Can the stock deliver tasty returns?
Clearly, this update demonstrates that Greggs is adeptly navigating the ongoing cost-of-living crisis. Not only that, LFL sales are ticking up while the store estate grows ever larger, with 100 to 110 net new shop openings expected this year.
Greggs continues rolling out its Bitesize shop format, with locations now open at London Bridge Station, Sevenoaks Railway Station, Dartford Station, Cheshire Oaks Designer Outlet, and Tesco Southwark Superstore. Overseas airport expansion is also on the menu, as well as further growth from branded frozen goods in supermarkets.
For me, the Greggs growth story isn’t over. And I think the stock, which trades on a forward price-to-earnings multiple of just 15, is worth considering.
A 3.4% dividend yield adds to the appeal, with management saying falling capital expenditure should assist higher shareholder returns beyond 2027. Today’s reasonable valuation and decent starting yield could support tasty long-term returns.
Should you invest £5,000 in Greggs Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Greggs Plc made the list?
Ben McPoland has no position in any of the companies mentioned.
This story originally appeared on Motley Fool
