Greggs (LSE:GRG) shares have fallen recently, but there are a few reasons why I think they can still offer good value for patient investors in 2026.

What’s happening to Greggs’ share price?

After many years of good fortune, the company found itself in a challenging situation. Warm weather has a negative impact on sales, with consumers less likely to buy heated baked goods during heatwaves, as we have seen in the UK in recent years.

Combined with higher costs and cautious consumer spending, these factors weighed on earnings and outlook, causing the stock price to fall from previous highs.

As I write slow on the evening of January 16, the company’s shares are valued at 1,650 pence, leaving the bakery chain’s market capitalization at £1.7 billion.

Despite the fluctuations, trade did not collapse. Sales are still growing and the reach is still expanding – thousands of stores across the country and further openings are planned.

Management is focusing on evening hours, delivery and drive-thru locations in an effort to squeeze more value from the brand and existing infrastructure. Investors aren’t completely sold yet, with shares of the company down 25.7% over the last 12 months.

Quotation

The pullback means Greggs is now banking on a valuation that I think is worth considering for value investors.

The company’s stock trailing price-to-earnings (P/E) ratio is 11.7, down from closer to 19 as recently as May 2025 and below the Footsie average. For a well-known national takeaway brand that continues to open up-to-date locations, this doesn’t seem like a stretch.

The income adds another element to the story. Greggs has a history of increasing its ordinary dividend over time. At the current share price, the dividend yield is 4.2%. That’s above the Footsie average and a competitive payout, especially for a stock that’s still trying to grow.

There are clear risks. Like-for-like sales growth has slowed, raising questions about how far the core format can be stretched. Changing eating habits, including the rise of weight-loss medications that impact all kinds of food and drink supplies, could reduce demand for time-honored high-calorie treats over time and force further changes to menus.

My verdict

For long-term investors who focus on reasonable valuations, mighty brands and cash returns, Greggs still looks like a solid company going through a breakdown rather than a structural breakdown. A low P/E ratio in the low teens, decent profitability and constant store openings are not typical for a company in difficulty.

That said, this view may be wrong. If profit growth stalls for several years, or if changing consumer behavior hits margins harder than expected, Greggs shares could remain affordable or fall.

Still, for a diversified portfolio, this combination of a reasonable valuation, a reliable brand and growing earnings is why I think Greggs stock is worth a closer look for value investors in 2026.