The Guzman Y Gomez Ltd (ASX: GYG) share price soared on Friday after reporting its FY26 result. As the chart below shows, GYG has soared since April 2026.
At this higher valuation, I'm not about to say that GYG is trading at an ultra-cheap price. But, I think the company has such a compelling long-term future that it still represents a good buy at this price.
The US expansion didn't work out, but the rest of the business is still growing rapidly and the outlook is compelling, in my view. Let's run through why Guzman Y Gomez shares are still compelling to me.
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Excellent revenue growth potential
I think one of the most important factors for deciding how big a return a business can deliver is how much its top line can grow.
Despite being two decades old, the business seems nowhere near finished growing at a strong pace.
In FY26 alone, the business saw Australian network sales grow 17.9% to $1.29 billion, and Asian network sales also rose 17.9% to $87.1 million. Many ASX shares would be happy with that level of growth, and the business is growing strongly in the two different markets of Australia and Asia.
During FY26, its Australian network expanded by 32 to 255, the Singapore network rose by three to 24, and the Japanese network remained at five. Excitingly, GYG expects more restaurants in both Singapore and Japan. I think there is significant potential for international growth over the long term.
The business expects to open 35 new restaurants in Australia in FY27, with a medium-term goal to open around 40 new locations annually in Australia. Over the ultra-long-term, it sees scope to reach 1,000 restaurants in Australia.
On top of that network growth, it's expecting mid-single-digit comparable sales growth in FY27. That's a solid level of growth for its existing network.
Profit margins expected to rise
If margins were stable as the network grows quickly, the business would have a good future. Guzman Y Gomez also expects significant margin improvement in the coming years.
In the 2026 financial year, GYG revealed that its underlying operating profit (EBITDA) as a percentage of network sales rose by 50 basis points (0.50%) to 6.2% in FY26. In the long term, the company is targeting this margin to reach 10%, but it's expecting it to reach between 6.7% to 6.9% in FY27.
With strong profitability for its corporate restaurants and franchise restaurants, the outlook is positive for strong profit growth.
Excluding the losses from the US business, operating profit (EBITDA) grew by 27.4% to $98.5 million, and statutory net profit rose 31.6% to $40.6 million.
I'm optimistic that earnings per share (EPS) can compound at a strong rate in the coming years.
Payments to owners of Guzman Y Gomez shares
The company is rewarding investors with pleasing dividends. For FY26, Guzman Y Gomez is paying out around 90% of its underlying earnings from Australia and Asia as a dividend, with a total dividend of 48 cents per share.
By rewarding investors with such a high dividend payout ratio, they are receiving significant income and still able to enjoy the capital growth from its expansion. With a significant franchise network (including Asia), GYG doesn't need that much retained earnings (capital) itself to see its restaurant network grow at a pleasing pace.
I expect the GYG dividend to grow roughly in line with underlying earnings in the coming years. Additionally, it announced a share buyback of up to $100 million, which can boost the EPS and dividend per share, while also improving the return on equity (ROE).
I think the Guzman Y Gomez share price has a very compelling long-term future.
