I’ve been watching the Greggs (LSE: GRG) share price for months, wondering whether this was a good time to buy it.

Britain’s favourite bakery chain has turned itself into a national treasure, supplying traditional fayre like sausage rolls and steak bakes, without feeling stodgy or old-fashioned itself. Unlike so many retailers, the cost-of-living crisis did it a favour, as cash-strapped shoppers saw a trip to Greggs as an affordable treat.

Greggs has been marketed brilliantly, from its clothing range (with Primark) to its legendary vegan sausage rolls. I’m not sure how many it actually sold, but everybody was talking about them.

FTSE 250 growth star

Management’s aiming to lift total store numbers from 2,500 to 3,500 and is looking beyond the high street to stations, airports, supermarkets and retail parks. It’s also testing evening openings.

At the same time, it’s swift to close underperforming outlets, which keeps margins high. Given that I’m such a fan, why didn’t I sink my teeth into its shares?

One of the first metrics I look at when deciding whether to buy a stock is the price-to-earnings ratio, and that was always high at more than 20 times. The price-to-sales ratio, which compares a company’s share price to its revenues, was also pricey, on the high side at 1.6, but not dangerously so.

Especially since sales have been growing fast, jumping almost 20%, from £1.513m in 2022 to £1.810m in 2023.

The board’s been willing to reward loyal shareholders too. A trailing dividend yield of 2.15% is modest but management’s progressive. It hiked the dividend by 3.5% to 59p in 2022 and then by 5% to 62p in 2023.

The Greggs share price has climbed 20.32% over 12 months and 62.84% over five years, and I felt it I was coming to the party too late.

Given all the excitement, it was vulnerable to shocks, and it got one on 1 October when it announced Q3 sales had slowed. The share price has plunged from 3,214p to 2,884p today, a drop of 10.26%.

Growth and dividend income

The slowdown was hardly a calamity. Managed like-for-like sales rose 5% but that followed 7.4% growth in the first half. High expectations were still confounded.

Greggs is still growing and still innovating, with an All-Day Breakfast Baguette, Mexican Bean & Spicy Cheese Flatbread and Pumpkin Spice Doughnuts the latest additions to its range.

But I still can’t bring myself to buy its shares at today’s lower price. There’s still a lot of growth priced into today’s valuation of 22.93 times earnings and there are risks. Can it maintain its cult status, or will it succumb to healthier eating trends (if they ever truly arrive)?

Brokers are more optimistic. The 11 analysts offering one-year price forecasts have set a median target of 3,332p, up 15.7% from today. There’s a wide range of views, though, with a maximum estimate of 4,040p and a minimum of 2,600p.

However, I won’t be taking advantage of today’s dip. It’s still pricey and I’m worried we’ve passed peak Greggs.