Greggs PLC (LSE:GRG)’s growing cash balances could offer scope for special dividends over the coming years as the bakery chain continues to impress, Shore Capital analysts say.
Analysts from the investment group forecast Greggs’ cash to sit at £160 million by late 2027, which they said could warrant rewards over and above its current 2.2% dividend yield.
Greggs had reported the figure at £141.5 million as of June in interim results, noting the figure would dip ahead as efforts to open 140 to 160 stores this year continued.
A 13.8% uptick in total sales was also reported, alongside a 16.3% increase in underlying pre-tax profit to £74.1 million.
Shore Cap said that while Greggs’ “outstanding track record of growth was further extended,” the stock was “well underpinned,” prompting a ‘hold’ rating.
Analysts added Greggs’s plans to take store numbers from 2,524 currently to above the 3,000 mark in the medium to long-term were “attractive” given the brand was still “underrepresented across many roadside and transport locations”.
“Greggs is no doubt a class act, with growth, cash generation and a return on capital employed that all merit premium ratings,” Shore Cap said.