Guzman Y Gomez released FY25 results! The company claimed they were spectacular, but investors disagreed

Guzman y Gomez (ASX:GYG) released FY25 results and it seems there is a disconnect between how the company’s management thinks things are going and what investors think. Or maybe investors realised the stock was overpriced to begin with…yes, even with ‘record results’. Either way, shares fell 20% and we thought we’d try to make sense of it all.

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Guzman y Gomez released FY25 results

GYG shares fell 20% on Friday 22 August 2025, have nearly halved from all time highs and are nearly back to all time highs. At least it has fair company – Inghams fell 20% today too!

Look at the headline figures and you may think GYG investors hadn’t been the Specsavers because it boasted nearly $1.2bn in sales (up 23%), $65.1m EBITDA (up 46%) and a $14.5m profit (up 152%). It paid its maiden dividend, 12.6c per share and closed with 256 restaurants in the world, a figure that had grown by 39 in the last 12 months and the average restaurant sold $6.7m if a drive-thru and $5m if lacking drive-thru. It claimed to have 98 restaurants in the pipeline.

Co-CEOs of GYG Steven Marks and Hilton Brett wrote a letter to shareholders, a step they indicated they would follow each reporting season. The pair indicated there was a lot of growth to come and that it aspired to be,’ The best and biggest restaurant company in the world’.

They talked about steps they had taken to help growth including new software platforms (including a point of sale system), intelligent upsell and personalised offers to loyalty members. In the long-term, GYG aims for 85% of restaurants to be drive-thru and for underlying EBITDA in Australia to be ~10% of network sales. In FY26, the company guided to 5.9-6.3%.

If the results were so good, why did shares fall?

Primarily because they missed consensus estimates. Consensus called for 7.6% comparable sales growth but just 3.7%. Hang on, didn’t sales grow by 23%? Yes, but that includes new stores that did not exist in the year before. There is growth in the top-line, but it is not because the stores are necessarily making more money, but there are more stores.

Also, did you see GYG’s profit margin? It was a whopping…1.2%. You often hear the phrase ‘never buy an airline‘ because it is high capex, low margin and often high competition. Now, we wouldn’t go so far as to say never buy a fast food stock, but those realities apply to the fast food sector too and make things difficult. Competition is intense, margins are low and it costs a lot of money to set up.

Did you know McDonalds needs prospective franchisees to put over a million of their own money (i.e. it cannot be borrowed finance, it has to be entirely their own savings) to open an outlet? The very reason is because McDonalds wants to minimise costs to itself, but enough of Maccas for this article.

Shares sinking back to reality

Also, for the sake of those who had been on Planet Mars, Guzman y Gomez listed at a ridiculously high multiple – an EV/EBITDA multiple of 38x. And that was before shares peaked at double their IPO price. Many argued shares were overvalued pre-IPO, but people just didn’t want to miss out and so kept buying in…until the penny dropped and there was a rush to sell out.

This isn’t the first time it happened and won’t be the last, but it was the first time in a while following 2 years of rising interest rates that left investors unappetised by high-growth companies with low or no profits.

Where to now?

Even in spite of today, analysts covering Guzman y Gomez have an average price of US$34.09. Of course, there is a diversity of opinions amongst the 11 analysts, ranging from $16 on one hand and $54 on the other.

For FY26, analysts call for $563.8m revenue (up 26% from the $446.4m revenue in FY25) and a ~$26m profit. Then in FY27, $694m revenue and a $47m profit.

On this basis, you may think GYG is a buy, but even with this growth, it is 110.3x P/E, 31.8x EV/EBITDA and 1.5x PEG for FY26. FY27 looks a bit more respectable with 0.9x PEG, 63.5x P/E and 22.5x EV/EBITDA, but still not cheap.

But you run the risk of a volatile share price and a very competitive industry.

• What are Guzman y Gomez’s multiples for FY26?

  As of 22 August 2025, 110.3x P/E, 31.8x EV/EBITDA and 1.5x PEG for FY26.

• What were Guzman y Gomez’s FY25 results?

  The company achieved nearly $1.2bn in sales (up 23%), $65.1m EBITDA (up 46%) and a $14.5m profit (up 152%)

• Does Guzman y Gomez pay a dividend?

  Yes, it paid 12.6c per share in FY25.

• What is Guzman y Gomez’s FY26 guidance

  It had indicated EBITDA to be 5.9-6.3% of sales.