Will Guzman y Gomez’s record profits be overshadowed by stock volatility?

Spotlight on Guzman y Gomez

In this week’s edition of IG Macro Intelligence, we examine the financial year (FY) 2025 earnings of ASX-listed fast food chain, Guzman y Gomez (ASX:GYG).

Healthy profit

Fast food chain Guzman y Gomez (GYG) delivered a healthy profit for FY 2025, with network sales surpassing $1 billion for the first time.

Full-year profit more than doubled to $14.5 million, while earnings rose 45.5% to $65.1 million. The burrito chain also declared a maiden dividend of $0.126 per share.

Co-CEO Steven Marks highlighted the record-breaking achievement and noted that their drive-thru margins were at an all-time high.

Turning down the heat

Investors pressed the sell button on GYG shares in the wake of its earnings, after the first seven weeks of sales for FY 2026 came in weaker than expected.

FY 2025 results also missed RBC Capital Markets’ estimates by 7.5% and the overall analyst consensus by 3.5%

GYG ASX share price chart

Shares plunged by as much as 24% following the results, touching their $22 initial public offering (IPO) price before closing down by a record 18% at $23.70, wiping almost $545 million from market value.

Marks expressed confidence, stating that GYG's value will be realised over time and emphasising pride in the team’s execution.

Analyst outlook

Analysts have been turning down the heat on GYG’s outlook in the wake of the results.

UBS cut its price target by 15% to $26.50, Morgan Stanley slashed its target by 26% to $31.20, Morgans lowered its target by 19% to $30.60, and Wilsons cut its target by 8.8% to $35.74 a share.

GYG historical trends and price targets

UBS maintained its 'neutral' rating on the stock, citing concerns about Australian same-store sales growth and investor sell-off following the results.

Meanwhile, Morgans maintains a 'buy' rating, with a belief that shares could rally a further 21%, even after substantially lowering their target price.

GYG buy/sell indicators and analyst projections

Shares have declined almost 30% over the past 12 months, compared to a 16% gain in the S&P/ASX 200 consumer discretionary index.

Fast food competitor Domino's Pizza shares are down more than 36%, while KFC operator Collins Foods has risen 24%.

ASX Tradewatch data show little demand for GYG shares, with the 200-day moving average trending downwards. Still, the average broker recommendation for GYG is a 'buy', with a target price of $29.43, suggesting more than a 17% upside.

GYG daily candlestick chart

Expansion on the menu

Despite being impacted by the market due to its outlook, GYG remains confident of future growth and is continuing its US expansion plans. The company currently has 256 restaurants worldwide, including 98 in Australia, 21 in Singapore, and five in Japan. It aims to have 1000 Australian stores eventually, to rival McDonald's.

In the competitive US market, GYG plans to open up to 15 restaurants in the Chicago area, with one drive-thru and one urban strip restaurant slated for opening in FY 2026.

Adam Dawes from Shaw and Partners suggested that GYG may face challenges in an oversaturated quick-service restaurant (QSR) market in the US.

Marks mentioned that each American restaurant needs to make at least US$3 million a year to be sustainable. In FY 2025, GYG reported a $13.2 million loss on its seven US operations, more than double FY 2024’s $6.5 million loss.