It's been a rough year for Guzman Y Gomez (ASX: GYG) shares so far.
Shares in the S&P/ASX 200 Index (ASX: XJO) Mexican fast food restaurant chain, which listed on the ASX 200 on 20 June, are down 2% in afternoon trade today, changing hands for $31.29 apiece.
That still sees early investors who took part in the initial public offering (IPO) price of $22.00 sitting on some handsome gains. Investors who bought the ASX 200 restaurant stock at the end of its first day of trading for $30.00 a share are still up 4.3% on that investment.
Unfortunately, I can't say the same for investors who bought the stock on 2 January. Guzman Y Gomez shares are down 21.58% since then.
But following on that big retrace, is now a good time to buy shares?
Image source: Getty Images
Are Guzman Y Gomez shares in bargain territory?
Morgans' Damien Nguyen said the company has "exciting growth prospects", but he's not quite ready to pull the trigger yet (courtesy of The Bull).
"GYG is a Mexican themed restaurant chain with strong brand appeal and exciting growth prospects, particularly as it expands domestically and internationally," said Nguyen, who has a hold recommendation on Guzman Y Gomez shares.
"Focusing on fresh ingredients and efficient service gives it an edge. Early performance as a public company has been solid," he noted.
As for why he recommends staying on the sidelines for now, Nguyen added:
However, it's still early days, and the current valuation prices in a lot of future success. For investors already holding the stock, it's worth watching its store rollout and financial performance before adding more. We suggest staying patient and holding for now.
What's the latest from the ASX 200 fast food stock?
Guzman Y Gomez shares closed up 3.7% on 8 April, the day the company released its latest quarterly update.
On the growth front, the company opened three new restaurants in Australia and two in the United States over the three-month reporting period.
Across its business, total quarterly sales were up 23.6% year on year to $289.5 million. In Australia, comparable store sales were up 11.1%.
Guzman Y Gomez shares could also begin attracting passive income interest after the company flagged its intentions to begin paying dividends.
Management said that with GYG's strong balance sheet and cash flow generation, shareholders could receive their maiden dividend payment this September.
