Are Greggs (LSE: GRG) shares as cheap as its range of sandwiches and pastries? The share price of the nation’s favourite budget bakery dropped 53% between 2024 and 2026 and is still 44% off its all-time high. Given the stock’s volatile history – big swings up and down are par for the course here – I’d not blame any investor for sensing a golden buying opportunity. A blowout earnings report in July 2026 suggests worries about the company performance are unfounded too.

Perhaps the strongest piece of evidence for the underpriced nature of Greggs shares is the valuation. A price-to-earnings ratio that dropped as low as 10–11 at one point (and still below what many consider the ‘fair value’ P/E of 15) suggests there might be serious value on offer. Here’s why.

Up and up

Here’s the thing about Greggs: it’s a growing company. The firm is opening new stores in the hundreds each year. While a saturation point will be reached at some point, another 800 are on the cards for the next few years. There’s the possibility of expanding beyond this green and pleasant land too. A new store in Tenerife is already allowing holidaymakers to get cheap grub at the airport.

Stocks that are expanding at such a pace tend to have a rising share price and command a premium in their valuation. Growth stocks tend to, well, grow. But that’s not what’s happening here.

There are other avenues for growth being explored too. Whether it’s bakeries open in the evening or clothing line collaborations with Primark, this seems to be a brand on the up and up – not one with a cratering share price. So what’s going on?

A buy?

Greggs is dealing with a number of problems too. Inflation is a big concern – consumers rarely like their ‘budget option’ to increase in price. And coming on the back of years of elevated inflation, the consequences of the war in Iran could push supply costs up yet further.

Wage costs from recent government changes have hit hard for one of the UK’s biggest retail employers. Minimum wage rises and an increase to National Insurance are two factors to make a dent in its margins.

Also, theft is becoming a growing problem, necessitating changes to display cabinets and the introduction of ‘robocops’. These costs aren’t ideal and could make the firm’s stores seem less welcoming to paying customers.

The silver lining might be that these are issues competitors will be dealing with too, to some degree. An opportunity for a dynamic company to grow market share? Maybe. There are clearly risks here, but this is one stock I feel has turnaround potential. I think Greggs could be worth considering, but personally I’ve got my eye on other opportunities at the moment…

Should you invest £5,000 in Greggs Plc right now?

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John Fieldsend does not hold any positions in the companies mentioned.