S&P/ASX 200 Index (ASX: XJO) shares that are expecting significant growth and have the competitive advantages to deliver that growth can be very compelling buys.
There are plenty of quality businesses on the ASX that are among the leaders nationally (or even globally) at what they do. However, some appear headed for slow earnings growth for the foreseeable future, partly due to their already substantial size.
It's difficult for a huge business to continue growing rapidly because they may already own a significant market share, and it's challenging to grow that even further. For example, Commonwealth Bank of Australia (ASX: CBA) is already the biggest ASX bank share and capturing further market share could require lowering its loan rates and margins, which may impact overall profitability.
I believe the following two ASX 200 shares could deliver exceptional earnings growth over the next five years.
Image source: Getty Images
Guzman Y Gomez Ltd (ASX: GYG)
As the chart below shows, at the time of writing, the Guzman Y Gomez share price has fallen by approximately 30% in the last six months, meaning it's now much cheaper.
The Mexican food business has a goal of reaching 1,000 Guzman Y Gomez locations in Australia over the next two decades. That implies a possible rise of more than 340% over that time period, in just this country alone. It's aiming to reach annual openings of 40 in Australia in the foreseeable future.
The company is also expanding its international network across multiple countries. At the end of FY25, it had 32 international restaurants, with six in the US, 21 in Singapore and five in Japan. At the end of FY24, it had 26 international restaurants, so its network grew by six locations in FY25, or 23% in percentage terms. FY25 total network sales increased 23% to $1.18 billion.
In the first seven weeks of FY26, it saw comparable sales growth of 3.7% for its existing restaurants in Australia, Singapore and Japan was fairly disappointing. But, at this lower Guzman Y Gomez share price, I think the combination of the potential restaurant rollout and decent comparable sales growth is very appealing.
In FY26, it's expecting its segment underlying profit (EBITDA) as a percentage of network sales to rise to between 5.9% to 6.3%, up from 5.7%. It also expects to open 32 new locations in Australia in the current financial year.
I believe the ASX 200 share will be significantly more profitable by FY30, with a larger restaurant network, higher margins, and a higher dividend.
TechnologyOne Ltd (ASX: TNE)
This is a technology business that provides software for organisations like companies, local councils, universities and so on. It has well over 1,000 subscribers from across the world.
This ASX 200 share also has a big goal. In the FY25 half-year result it achieved $511.1 of annual recurring revenue (ARR) and by FY30 it wants to reach $1 billion of ARR.
A key factor in why I'm confident it can reach that goal is the net revenue retention (NRR) it's achieving. That's a measure of how much revenue its existing client base generated this year compared to last year. TechnologyOne targets a NRR of 115%, meaning the current subscribers could deliver 15% higher revenue for the company than the prior year. This growth rate implies a potential doubling in five years. In HY25, it impressively reported a NRR of 118%.
The UK is a very large addressable market for the business, but it's only just getting started there. In the HY25 result, it delivered 50% growth of UK ARR to $43.1 million. I'm hopeful this can become a sizeable contributor to the business.
If TechnologyOne can continue with a very low loss rate of subscribers, growing its presence international presence and delivering higher profit margins, it could be a major winner. The ASX 200 share's commitment to investing in improving its software gives me confidence it can win subscribers and the operating leverage nature of providing software makes me believe it can increase margins over time.
