In 2024 Guzman y Gomez (GYG) was the IPO everyone wanted a piece off, we were bearish above $40, leaving the stock alone. The forward blended P/E of +90x remains lofty for the fast-food goliath, though it has halved from ~240x at listing, with investors now paying a little less for solid growth and momentum in store rollouts, though clearly the market isn’t convinced on the numbers just yet based on recent price action. Last months 1H result saw the stock fall ~14% as sales momentum slowed, with Australian comparable sales coming in at +4.4%, from the +9.4% a year ago.
At this stage, MM is leaving GYG alone, even after its more than 50% drop, finding the decision to continue returning capital this early in the growth cycle puzzling. We’d typically expect every spare dollar to be directed toward new stores, brand investment and offshore expansion rather than dividends and buybacks. Its path doesn’t feel like a growth stock commanding a high valuation to us.
Short interest in Guzman soared from around 5% to 14% in the second half of 2025. Although the SP has tracked sideways this year, it remains at 13.3% today, the 4th most shorted stock on the ASX.
- We see some value slowly emerging in GYG, but there’s no hurry to buy the stock after last month’s update.
