Guzman Y Gomez (ASX: GYG) shares have had a rough year so far.
Shares in the S&P/ASX 200 Index (ASX: XJO) Mexican fast food restaurant chain closed up 1.7% on Friday, trading for $24.84 apiece.
Despite that welcome lift, the ASX 200 stock remains down 37.7% year to date. Losses that won't be materially improved by the maiden 12.6 cent per share fully franked final dividend the company paid on September 30.
As you may be aware, Guzman Y Gomez first listed on the ASX 200 on 20 June 2024.
If you were able to participate in the initial public offering (IPO), you could have picked up shares for $22.00, and you'd still be sitting on a gain. But if you bought shares at the end of its first day of trading, when the stock closed at $30.00 a share, you'd be nursing a sizeable loss.
Looking ahead, however, Jason Pohl, a partner at ECP Asset Management, foresees a much more profitable year for shareholders in 2026 (courtesy of The Australian Financial Review).
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Why the sell-off in Guzman Y Gomez shares looks overdone
When asked his take on the market's concerns about its sales numbers and outlook, Pohl, whose fund holds Guzman y Gomez shares, said, "We see the concerns as overstated. GyG's recent price swings look more like the market reacting to short-term signals than a change in the core story."
According to Pohl:
The Australian business is still the anchor. Unit economics remain strong, corporate margins have improved, and the pipeline is large and increasingly weighted to drive through formats that lift returns and throughput.
Like-for-like sales were softer early in FY26, but that can reflect the cadence of marketing, the mix of day parts, and a deliberate pullback from heavy aggregator promotions. Timing effects can blur the underlying trend.
Guzman Y Gomez shares closed down 2.3% on 9 October, the day the company reported its September quarter results. That came despite the company reporting a 17.4% increase in its Australia sales to $305.5 million.
On the growth front, Guzman Y Gomez opened five new restaurants globally over the three months: three in Australia, one in Singapore, and one in the United States.
Pohl is also bullish on Guzman Y Gomez based on the company's strong balance sheet, which enabled it to launched a $100 million share buyback last month.
Pohl noted:
It's interesting that GyG's balance sheet strength is under-appreciated by most. The company holds significant cash, has no debt, and paid a modest, fully franked dividend without starving growth. That combination supports continued investment in Australia, measured testing in the US, and capital returns when appropriate. Few quick-service restaurant concepts get all three levers at once.
Pohl added, "Pricing discipline is another quiet positive. Management leant towards value while many peers took price."
He continued:
In a more budget-conscious environment, that positioning deepens loyalty and protects frequency, even if near-term comps look less exciting. Better to protect frequency and brand equity than chase a quick uplift that fades.
At the end of the day, he expects the company's Australian operations to deliver outperformance for Guzman Y Gomez shares.
"Our thesis centres on Australia," Pohl said.
He explained:
We remain positive on the long-term opportunity, as GyG is a high-quality, growth company. Resilient fundamentals, a strong balance sheet, and multiple levers to lift earnings provide a sustainable path to compounding.
Pohl concluded, "For long-term investors, that combination is hard to beat."
