While some FTSE-listed companies have been going gangbusters in recent times, Greggs’ (LSE: GRG) shares have been trading sideways. Sure, there’s been the odd bit of movement. But anyone taking a position six months ago and not looking at their portfolio until today would see virtually no change to the value of their stake.

So why on earth would I consider buying today?

Great value

Well, one argument is the valuation. Put simply, Greggs is now an awful lot cheaper than it used to be.

Based on current forecasts, I’d be required to pay the equivalent of 13 times earnings for the stock. That’s roughly in line with the multi-decade average among UK shares. It’s also substantially below where it was in September 2024.

Back then, the shares were over 3,000p and the price-to-earnings (P/E) ratio was around 30! That’s more akin to an up-and-coming tech stock rather than a sausage roll seller. And it’s precisely why I grudgingly dumped my position in Greggs around that time.

In hindsight, it proved to be a lucky move. The shares started falling not long after as sales growth began to stall. But now that expectations have been adjusted, I might conclude that buying today would give me a sufficiently large margin of safety. After all, this is a business that still generates above-average margins and sizeable returns on the money it puts to work.

There are other attractions. Using the current share price, the forecast dividend yield is 4.3%. The FTSE 250 index in which Greggs occupies a spot, yields 3.2% as a whole.

Greggs shares: worse to come?

The trouble is, no dividend is ever truly safe. While these cash distributions look set to be comfortably covered by expected profit for now, they could be reduced further down the line if trading really starts to sag like a soggy pasty. And we do know that Greggs isn’t short of headwinds. These include sluggish consumer confidence, intense competition and rising costs. The advent of weight-loss drugs is another hurdle, especially if uptake within its customer base accelerates.

Collectively, these problems help to explain why the shares are more popular among short-sellers in the UK than any other. In short, a substantial number of traders are betting big money that this stock has further to fall.

Short-sellers can be wrong. But this state of affairs hardly inspires confidence.

Binary bet

Right now, I remain firmly on the fence as to where Greggs‘ shares go next. But I also think we won’t have long to find out.

The company releases its latest set of full-year numbers on 3 March. Any acknowledgment from management that the slowdown in sales is no longer ‘temporary’ (as appears to be the case) could see more investors throw in the towel.

On the flip side, the merest hint that the Newcastle-based business has managed to outpace its own or analysts’ targets could cause the share price to surge, at least in the short term.

For me, this makes Greggs something of a binary bet today.

I’m a Fool, not a gambler. So I’ll be sifting through the outlook statement with a fine-tooth comb and making a decision on whether to keep the company on my watchlist after that.