Shares in Guzman y Gomez (GYG) plummeted to a record low on Friday, dropping as much as 16.5 per cent to $17. This is below its initial public offering (IPO) price of $22 earlier this year. The stock has consistently traded below its IPO price since the beginning of the month and was last down 10.8 per cent at the time of writing. Guzman y Gomez is an Australian-based Mexican fast-food chain that operates restaurants across Australia, Singapore, Japan, and the United States. It focuses on providing freshly prepared Mexican dishes.
According to UBS analyst Shaun Cousins, the company’s underlying EBITDA of $33 million for the first half was slightly below estimates, although a reported profit of $10.6 million exceeded expectations. The Australasia segment showed positive performance, with underlying EBITDA of $41.3 million, a 30 per cent increase. Same-store sales growth in Australasia reached 4.4 per cent, although this was modestly below consensus estimates.
However, the US market presented challenges, with an underlying EBITDA loss of $8.3 million, which was weaker than anticipated. E Toro market analyst Zavier Wong noted the significant drop in GYG shares from their highs, approximately 57 per cent. He highlighted concerns surrounding US losses and a high valuation multiple as potential long-term issues. Despite these concerns, Wong pointed out the company’s strong earnings growth, substantial cash reserves, and shareholder-friendly actions such as dividend payments and share buybacks.
