Guzman Y Gomez Ltd (ASX: GYG) shares fell 3.31% to close at $28.04 yesterday.
Guzman Y Gomez is a Mexican-themed restaurant network in the quick service restaurant (QSR) category.
The company opened its first restaurant in Sydney in 2006 and now has more than 220 in four countries.
Guzman Y Gomez was listed on the ASX last year.
We're just past this ASX 200 stock's first anniversary, and the following chart depicts its journey.
A quick history
Guzman Y Gomez shares began trading at $22 apiece in June 2024.
The stock had a gradual upward trajectory until peaking at $45.99 per share in February this year.
Guzman Y Gomez shares then took a tumble after the company released its half-year results.
Whilst overall network sales rose 22.8% to $577.9 million, sales in the United States fell 12.7% to $4.9 million.
Sales in the Australia segment (which includes Singapore and Japan) rose 9.4% to $573 million.
Guzman Y Gomez reported a 91.2% lift in profit after tax to $7.3 million and said it was on track to beat its prospectus FY25 forecast.
Since that big drop in February, Guzman Y Gomez stock has slowly drifted lower.
Where to next for Guzman Y Gomez shares?
In this article, we present opposing views from two experts about Guzman Y Gomez shares moving forward.
Bull view
Blackwattle Investment Partners says Guzman Y Gomez's current valuation and risk/reward profile "looks highly attractive".
Guzman Y Gomez reported total network sales growth of 23.6% to $289.5 million in the third quarter of FY25.
Comparable sales growth in Australia was 11.1%, which Blackwattle characterised as a "standout globally".
US sales increased by 23% from $2.6 million in 3Q FY24 to $3.2 million in 3Q FY25.
Mid-Cap Quality Fund portfolio managers Tim Riordan and Michael Teran commented:
Profitability for GYG franchisees is as healthy as the food, driving strong demand as they roll out new stores in AAA rated site locations.
Riordan and Teran say recent weakness in the Guzman Y Gomez share price reflected lower market sentiment and the risk of a sell-down by early investors, whose shares will come out of escrow in August.
Blackwattle says this risk is now priced in, commenting:
Whilst we view GYG as an 'Early Quality' business, we see significant upside if the business model is executed at scale and the current valuation and risk/reward opportunity looks highly attractive.
Bear view
Jonathan Tacadena of MPC Markets has a sell rating on Guzman Y Gomez.
The analyst says the risk of early investors selling their escrowed stock "may pressure the share price" over the coming months.
Commenting on The Bull, Tacadena says Guzman Y Gomez stock has "lost momentum" following its strong start a year ago.
He notes that the Guzman Y Gomez share price has fallen from $45.32 on 19 February to $28.04 at the closing bell yesterday.
Tacadena said:
Despite impressive Australian growth, US expansion has been disappointing.
The company is trading at multiples well above its peers.
