Guzman Y Gomez (ASX: GYG) shares could be one of Australia's top shares to consider right now. It could offer the right mix of revenue growth and rising profit margins to unlock great returns for investors.
In the future, it may be rare for GYG shares to trade at around $20, given how quickly the underlying business is growing. I also think the business is unlikely to fall more than 20% within 12 months, as it has done.
The Mexican food business looks like a good buy and one of Australia's top shares for the following reasons.
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Strong sales growth
I believe every great business needs to be able to deliver strong compounding. In other words, the company can justify excellent, sustainable share price returns because it's increasing its intrinsic value at a good pace as revenue and earnings climb.
A company growing earnings at 2% per year is not going to cut it if we're trying to outperform the market over the long-term.
GYG makes revenue from both its owned restaurants and the franchise ones. One of the best signs of the company's financial progress is its growing total network sales, which is partly driven by its expanding network of restaurants across Australia and Asia.
We continued to see how quickly the business is growing in the FY26 third quarter.
Australian network sales grew by 19.7% year-over-year to $320.4 million, while Asian network sales grew by 18.7% to $21.5 million. Across Australia and Asia, its comparable sales growth was 6.6%, a strong rate of organic growth for existing restaurants.
That quarterly update also showed the total number of Australian restaurants grew by 14.7% year-over-year to 242, Singaporean restaurants grew by 15% to 23, and Japanese restaurants increased 25% to five.
In the ultra-long term, the company aims to reach 1,000 Australian locations over the next 20 years. It is expected to open 32 Australian restaurants in FY26, showing it's making solid progress towards that long-term goal.
If its overall network sales can continue growing in the teens in percentage terms for the foreseeable future, it'll very likely translate into rising profit, making it one of Australia's top shares, in my view.
Growing profitability
Investors usually value a business based on how much profit it's generating and could make in the future.
We've already seen that the company's network sales are growing quickly and its profit is growing even faster. Operating leverage is a very powerful force for a great company.
In the FY26 half-year result, network sales grew 18% to $681.8 million, segment underlying operating profit (EBITDA) grew 23.3% to $33 million, profit before tax (PBT) grew 26.2% to $19.2 million and net profit grew 44.9% to $10.6 million.
That HY26 result saw the segment underlying operating profit (EBITDA) as a percentage of network sales improve by 0.6 percentage points to 6.1%. In the long-term, the company thinks this operating profit margin could improve to 10%, which would be a significant improvement over time and implies the bottom line can continue its fast growth.
Significant improvement of profit margins adds to my belief that this business is one of Australia's top shares.
Valuation
According to Commsec's projection, the company is valued at 32x FY28's estimated earnings.
I think this is a great time to invest. But, it's not the only ASX share with a very compelling future.
