When it comes to investing, many people tend to break the stock market into growth and income shares. Take Greggs (LSE: GRG) as an example. Greggs’ shares offer a 3% dividend yield, making them attractive for some income-focused investors.

But are Greggs’ shares just an income story – or might there be a potential growth perspective to consider too?

A decent income story

Let’s start with the income side of things. On one hand, Greggs looks like a solid income provider.

Its fast-approaching 2,800 shops benefit from a lot of repeat custom. A proven business model offers economies of scale and relatively foreseeable input costs.

Yes, those costs may rise due to inflation and labour expenditure and indeed that is a risk, but by consolidating some manufacturing sites Greggs is hoping to cut out some labour costs. However, in broad terms, Greggs’ input costs are relatively predictable.

That seems like it should be good when it comes to dividends. With a proven business model and largely predictable input costs, Greggs ought to be able to turn out a decent profit each year that it can use to fund dividends.

A tasty dividend — but never guaranteed

In fact, funding dividends is only one of the uses where it puts its spare cash. It is also continuing to open new stores at a fair clip. That helps growth but eats into cash that might otherwise be available for paying dividends.

Still, Greggs is a sizeable business and can often fund both growths and dividends. Besides input costs though, output is another consideration – and here things are less predictable.

The pandemic predictably saw customer demand slump – and Greggs cancelled its dividend. No company’s payout is ever guaranteed.

Then last year, a shock profit warning was pinned on warm weather hurting customer demand. This year has been smoother – helping boost Greggs shares in recent months. But clearly demand shifts remain a risk for the company. Weight loss drugs are another factor adding to that risk.

Greggs has ongoing growth potential

From an income perspective then, I see Greggs’ shares as decently attractive but not outstanding.

What then, about the growth prospects? A bakery chain that is already ubiquitous in a mature market may not sound like much of a growth story.

In fact though, Greggs has grown steadily over the decades. It continues to see opportunities to expand its shop estate in the UK. It has only recently dipped its toe into international expansion, something I believe could be a significant long-term growth driver.

By extending its shop opening hours and expanding its offer through retail partners such as Tesco, I believe Greggs has further growth opportunities over and above opening new UK shops.

Those may not offer massive short-term growth but, taken together over the long run, they could add up to a sizeable opportunity to expand both revenues and profits.

But at 18 times earnings, Greggs’ share price does not look cheap to me. Yes, there are growth opportunities, but given that valuation I reckon Greggs’ shares already price those in.

So while I think Greggs offers both growth and income opportunities, its shares are already priced accordingly, in my view. So I am looking elsewhere in the market for what I see as more attractively-priced opportunities.

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Christopher Ruane does not hold any positions in the companies mentioned.