Guzman y Gomez (ASX: GYG) Rises as $100 Million Buyback and Strong Q1 Results Boost Investor Confidence

Charlie Youlden Charlie Youlden, October 9, 2025

GYG Shares Lift as $100 Million Buyback and Global Growth Fuel Renewed Market Optimism

It has been a challenging year for Guzman y Gomez (ASX: GYG) shareholders, with the stock falling 27 percent as the market recalibrated its expectations after a blockbuster IPO. But sentiment may be starting to shift. In its latest Q1 FY26 update, GYG reported a strong rebound in growth and a confident move that caught investors’ attention — a $100 million share buyback.

Buybacks often signal management’s belief that their company is undervalued and that long-term growth prospects remain intact. Investors saw this recently with Block (ASX: XYZ), a share buyback plan, and since then, the stock is up 26% and the numbers appear to back that view. GYG Global sales climbed 18 percent year over year to AUD 330 million, led by a 17 percent lift in Australia, 29 percent in Asia, and an impressive 65 percent in the United States. Despite the competitive landscape, GYG’s U.S. expansion is gaining early traction, with seven restaurants now open and no closures across its 261-store network.

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GYG Outlines FY26 Growth Plans with Margin Improvement

For the remainder of FY26, management expects underlying EBITDA margins to improve to between 5.9 and 6.3 percent of total sales. GYG also plans to open 32 new restaurants in Australia, including 23 drive-thru locations and 9 strip sites, reflecting its continued focus on scalable, high-volume formats.

Beginning in the second quarter, GYG will launch a AUD 100 million share buyback program, which will reduce the number of shares on issue and return additional value to shareholders. This move highlights the company’s confidence in its growth outlook and strong balance sheet, as it continues to reward investors through both dividends and capital returns.

Is GYG worth its price?

When assessing Guzman y Gomez’s (GYG) current valuation, a quick look at key multiples offers a useful perspective. The company’s top-line growth remains strong, with revenue forecast to grow at an average compound annual rate of around 24 percent between FY24 and FY28. EBITDA is expected to expand even faster at roughly 60 percent per year, supported by improving margins and the continued rollout of higher-volume drive-thru formats.

On a revenue basis, GYG trades broadly in line with global peers such as Chipotle and Domino’s, suggesting its valuation is fair given its growth profile. The current EV/EBITDA multiple of around 46 times may seem expensive at first glance, but when considered alongside expected EBITDA growth of nearly 90 percent next year, it begins to look more reasonable. If management delivers on its FY26 to FY28 targets, earnings growth could drive a re-rating as valuation multiples compress toward the global industry average of about 20 times forward EBITDA.

However, it is worth noting that Morningstar currently rates GYG as overvalued, suggesting that the market may already be pricing in a significant portion of the company’s future growth.

 

Pitt Street Research director(s) own shares in Guzman y Gomez.

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