Greggs 🌭 🥖 🧁 - GRG

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Greggs still rolling dough

I was working on my low quality businesses article, and to get into some number crunching, I was looking at high quality firms. I’m particularly interested in their fundamentals, so I can spot trends in the numbers and where a company might be heading.

One company that comes to mind is Greggs, and its solid fundamentals, especially its return on capital employed (ROCE).


(Source)

For context, Greggs used to be exposed to the declining foot traffic on the UK’s high streets, but the firm worked to fix it, with good results.


(Source: Google Finance)

The company moved from the high street to transport hubs like railway stations and airports - as well as hospitals, universities, and more is likely, e.g. sit-down spaces in big supermarkets, etc.

There is of course more to its strategy, including product innovation with the vegan sausage roll and other products.

Greggs achieved good returns from the money spent on its changed strategy, as its fundamentals show it.

That’s where return on capital employed (ROCE) is a useful figure I tend to look at across companies (of course always try to understand the fundamentals in the context of the company’s story as well).


(Source)

As for comparison, the same metric for Lloyds is 0.53. For Vodafone it’s -2.23.

Last but not least, while strong fundamentals point to a potentially positive future, there are no guarantees and risk is always present. As an example, Gregg’s exposure to transport hubs means that declining traffic due to the coronavirus might impact its fundamentals and performance this year. Risks like that don’t always manifest in the fundamentals (early enough).

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Its exposure to transport hubs is tiny. It has over 2000 stores and a handful are in airports (Newcastle and Manchester have them. Luton is getting one). And 41 at motorway services.

Not many stations have a Greggs either (Wakefield Westgate and Hull come to mind). But the advantage of a railway station is that they tend to already be in the busiest parts of a town.

If Coronavirus is harming them. I’m sure they’ll benefit from the fact Just Eat are now delivering their products, and their expansion into Asda stores can appeal to the preppers.

Ipswich station has a Gregg’s. I’m a regular there, staff even recognize me, and left my reusable cup when I forgot it once, including giving me an extra coffee.

Good stuff @Connor.

Since it’s all relative, you can throw in a few more metrics, such as:

[Update] @Connor - more trailing 12 month and end-last reporting period numbers - summary:

(Yahoo! Finance)


This is not apples to apples though but I see your point.

If there are other comparables, such as publicly traded UK coffee chains (are there any?) or privately held ones (e.g. Pret) with financial data from the UK Company House, you can always use them instead. But what do I know. Nobody knows. Fugazi.

Greggs have a had a hell of a run in the last year. Hopefully when they re-open their shops we will empty them :slight_smile:

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On this point, I hope the public remembers which companies did well by their staff (i.e Greggs & Home Bargins) and also rememeber those that didn’t (looking at you Mr.Branson)

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Morning,

I completely agree. While I still hold Greggs and expect the price to suffer somewhat, I am hopeful the public will remember who cared for their staff.

On my mind is what will happen to the staff and if they are being paid. It will be another factor on the share price but the goodwill and stronger staff moral I am positive will pay off.

Thank you,

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Pretty ugly update, but then again what isnt at the moment. I think that at 1400 its quite attractive though. Solid balance sheet even with the commercial paper signed, and achieves operating breakeven at 80% when they’re trading at 72% as of last week. Dividend isnt coming back until a vaccine but @DrInvest you’re right - they didnt even have to close but correctly decided it was the right thing to do - public will remember that. What do people think?

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Pondering over this one. At 1379 now which is really attractive, especially for a company so creative and innovative. Obviously the high street is in relative tatters but I believe Greggs has the ability to navigate through this and recover then thrive. Buy now, or does it dip even lower?

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Greggs is on a (sausage) roll today!

Up about 20% today

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Oh my god :sweat_smile:

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Looks like another solid morning for Greggs after a positive RNS blows the lockdown 3.0 blues away

Edit: There’s an article summarising it in The Times https://www.thetimes.co.uk/edition/business/greggs-braced-for-first-full-year-loss-since-float-7tjlg78vq

Up 6% this morning on the results

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For all the Vegans out there!

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the vegan sausage roll was bloody tasty I’m up for this!

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I just wish their vegan/meat free/plant based sausage roll was cheaper! You’d think it would be a lot cheaper to produce at every stage of the supply/production line but I think they charge a premium for it.

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True anything with Vegan in the title you can add £££ to it’s price

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