The company’s adjusted earnings per share is due to increase from £0.308 in 2013, up to £0.415 in 2014. Sales are also expected to climb from £762 million up to £796 million. The pre-tax profit is forecast to jump by 66%, from £33.152 million up to £55.071 million.
Only seven institutional analysts cover Greggs but of those, four have them as a buy, two as a hold and only one as a sell. The average twelve-month price target for the company is 768p. That level is over 16% below the current market price, and it is worth noting that at least two of these institutions have not updated their targets since September 2014.
Expectations are high following last month’s comments from management that the full-year figures will smash expectations following a very strong Christmas and new year. Even if a company does expect figures to smash institutional expectations it is unlikely to say so unless it is extremely confident. Driving this confidence has been a change in products available and in the type of locations being used for new outlets.
Over the last twelve months the company has embarked on an upgrade of its menu of goods on sale and migrated away from the reputation of being a bakery outlet. In particular, the success of its range of soups and steak pastries along with increased sales of coffee. Greggs has also looked at changing the locations of new outlets, with a particular focus on travel hub points such as train stations.
Considering the bold company statement ahead of its full-year figures release, we should be expecting big things. The sentiment towards the company now is almost an inverse to last year, where the weather conditions were frequently used as an excuse. Although the share price has more than doubled in the last year, the growth of profits could well be set to match this pace.