The Greggs (LSE: GRG) share price was already in trouble before the Iran war sent investors into a panic. After a brilliant run, when the FTSE 250 bakery chain could do no wrong, its sales, profits and share performance all started to cool in late 2024.

Middle East worries tensions to make a bad situation worse by driving up inflation and leaving consumers feeling even poorer. Investors who expected Greggs’ shares to take a beating may be in for a surprise though. They’re actually up 5.8% over the last week. Only six FTSE 250 stocks did better. What’s happening?

FTSE 250 mixed bag

While investors obsess over geopolitical events, individual company news can still drive share prices. Last Tuesday (3 March), Greggs reported that total sales rose 6.8% to £2.2bn in the year to 27 December while like-for-like sales in company-managed shops climbed 2.4%.

Chief executive Roisin Currie hailed a “resilient” performance, pointing to growing market share and continued strategic progress. That may explain why the shares have held up. Yet these weren’t exactly stellar results.

Underlying pre-tax profit fell 9.4% to £172m, hit by volume pressure and rising fixed costs tied to manufacturing, logistics and technology capacity.

Greggs was also fairly downbeat about the outlook. It expects market conditions to “remain challenging” this year. I don’t think anybody would dispute that right now.

Greggs insists its strong value proposition should support sales, but the new financial year looked slow, even before Iran. In these straitened times even a cheeky trip to Greggs is starting to feel like a luxury for many.

The group captured the public mood brilliantly for years, but Dan Coatsworth, head of markets at AJ Bell, has highlighted a “nagging feeling its proposition is becoming stale”, despite the company constantly refreshing its menu.

Growth, value and income

I see his point. I’m not a natural Greggs customer but I’ve popped in for the odd sausage roll or steak bake over the years. Lately though, I haven’t much fancied it. Greggs admits dietary preferences are shifting. Consumers are increasingly looking for more protein, more fibre and smaller portions. The growing popularity of weight-loss drugs could also have an impact.

When I last looked at Greggs‘ shares on 1 March, the price-to-earnings ratio looked seriously tempting at 10.5. That was less than half the level seen during the boom years. Nine days later, it’s climbed to around 13.85.

The shift probably reflects weaker earnings as well as the recent bounce in the share price. It’s decent value today, but not dirt cheap. The trailing dividend yield has dipped slightly to about 4.2%, although that still looks pretty appealing for income seekers.

Even so, I’m not hugely excited by those results, and wonder if Greggs’ moment has passed. Die-hard fans might consider buying its shares today, but I can see plenty of FTSE 100 and FTSE 250 shares that look more tempting in the current volatility.