It has not been the best of times for high street bakery chain Greggs (LSE: GRG). Amid negative investor sentiment, Greggs shares have looked like a potential bargain to some investors – including me. I have added some to my portfolio over the past 12 months.

But is the share really the opportunity I think it is – or could it be a classic example of what is known as a value trap?

Heading the wrong way

Greggs shares have fallen 11% over the past year. That means that someone who invested £7,500 12 months ago would be sitting on a shareholding currently valued at around £6,675.

For now, that deficit of £825 is only a paper loss. Still, it can be uncomfortable to buy something thinking it is a bargain – only to see the share price sink further.

It is not all bad news, though.

Greggs is a cash generative business and that supports a healthy dividend.

Currently the yield is 4.2%. Somebody who invested a year ago at a higher share price would be earning a lower yield, producing around £280 per year of dividends.

It might not get better any time soon

Overall, Greggs shares have been disappointing in the past year.

When considering a share that has been heading down, one of the questions I ask myself as an investor is whether there are specific factors that could arrest that decline.

In the case of this share, I am more concerned right now about drivers that might push it further down than excited about what could move it upwards in the short term.

Consumer sentiment is weak, which could eat into spending. That may be bad for the demand side of things.

When it comes to costs, I also see grounds for concern. Greggs has already pointed out to investors the ongoing challenges it faces from growing wage and employee taxation costs.

On top of that, the current Middle East war could be bad news for Greggs’ energy bill, given how many power-hungry ovens and machines the baker operates.

Taking the long-term approach

But although I do not see any obvious short-term drivers to push the shares up, that does not mean it will not happen. A positive trading update could help, for example.

Either way, I have no plans to sell. Why? I am a long-term investor and from a long-term perspective, I continue to like the investment case for Greggs.

Some investors worry about sluggish like-for-like sales growth, suggesting that it could be a value trap that is trading on past successes.

However, I still think growth is positive even if it is modest. Also, it continues to open new shops. That will add more revenues, on top of like-for-like growth from existing locations.

Greggs has large economies of scale that enable it to deliver a simple but compelling value proposition for customers.

While costs are growing, people need to eat and Greggs remains a highly competitively priced option for a quick and easy snack or basic meal. I think the current share price emphasises the risks (which are real) at the expense of the positive aspects of the investment case.

Hopefully, over time, that will be reflected in the valuation.