GYG - Guzman y Gomez Limited - Strawman: ASX share price, valuation, research and discussion

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Valuation of $14.22

Raseekingalpha

Added a month ago

Ticker: ASX:GYG Current Price: $17.53 Valuation Stance: Overvalued (Fair Value $14.22 | Hard Buy Target $10.67)

There’s been a lot of debate about whether the 30% haircut on GYG following the 1H26 results makes it a "buy." To cut through the narrative, I ran the math using a grounded, real-world benchmark to find where the true value lies.

What happens if we strip away the "global tech-stock" hype, value GYG exactly like Australia's most established QSR giant, Domino's (ASX: DMP), and then demand a strict 25% Margin of Safety (MOS)?

Currently, Domino's trades at an EV/EBITDA multiple of 18.7x. Let's apply that exact multiple to GYG's two very different businesses: the brilliant Aussie core and the cash-burning U.S. anchor.

1. The "Clean" Aussie Machine

First, let's look at the core business (Australia, NZ, Singapore, Japan). This segment is a phenomenal, high-margin compounding machine with 22% drive-thru margins proving out the unit economics.

Annualized Core EBITDA: $82.6 million
Applied Domino's Multiple: 18.7x
Implied Enterprise Value: $1.54 Billion
Plus GYG's Net Cash: $236.4 million (Zero debt)
Clean Equity Value: $1.78 Billion

Divide that by the 103.4 million shares on issue, and the "Clean" APAC business is worth $17.22 per share.

Insight: If management announced they were shutting down the U.S. venture tomorrow, the stock at $17.53 is priced almost perfectly in line with Domino's.

2. The U.S. Anchor (The Multiple Works Both Ways)

We can't ignore the United States. Management is stubbornly funding an expansion that just posted a 12.7% drop in same-store sales.

Annualized U.S. EBITDA Loss: -$16.6 million

If you assign an 18.7x multiple to a company's profits, you must assign that same multiple to its subsidiary's losses. Every dollar burned in the U.S. destroys 18.7 dollars of shareholder value.

Destroyed Enterprise Value: $16.6m × 18.7 = -$310.4 million
The Per-Share Penalty: -$310.4m ÷ 103.4m shares = -$3.00 per share

3. The True "Domino's" Fair Value

Taking the phenomenal Australian business and subtracting the U.S. cash furnace gives us the consolidated reality:

Clean Aussie Value: $17.22
Minus U.S. Drag: -$3.00
Consolidated Fair Value: $14.22

4. The 25% Margin of Safety (The Buy Zone)

As value investors, we don't pay fair value; we demand a discount to absorb execution risks, unforeseen market shifts, or further U.S. cash burn. Applying a strict 25% Margin of Safety to that $14.22 fair value gives us our hard entry price:

MOS Discount: $14.22 × 25% = $3.55
Target Buy Price: $10.67

#Financials

Raseekingalpha

Added a month ago

I used Gemini to rengineer mornignstar analysis based on latest result.

vo classify the 1H26 results released on February 20, 2026, we have to look at the tension between "Operational Success" and "Market Expectations."

While the company is technically more profitable than ever, its stock is being treated as a "show-me" story where investors are no longer willing to pay for future growth that hasn't arrived yet.

???? The Good: Operational Efficiency

Profitability Surge: Statutory NPAT jumped 44.9% to $10.6M. This is the strongest signal that the business model works at scale.
Cash to Shareholders: A 7.4 cent fully franked interim dividend was declared, alongside a $100M share buyback. This is a "mature company" move that shows management isn't just burning cash for growth.
Margin Expansion: Australian EBITDA margins are expected to hit 6.0%–6.2% this year, up from 5.7%. This validates the "operating leverage" thesis—as they grow, they keep more of every dollar.

???? The Bad: Revenue & Store Execution

Top-line Miss: Revenue ($261.2M) and Adjusted EBITDA ($33M) both missed analyst expectations by 5% and 17% respectively. The market hates it when a "growth stock" stops growing as fast as the spreadsheets predicted.
The Store Pace: They opened 17 stores in the half, aiming for 32 for the full year. While this is a record for GYG, it is still below the 40-store-per-year goal that aggressive bulls used to justify a $30+ share price.
Slowing Momentum: Australian same-store sales growth slowed to 4.0% in Q1 FY26, a sharp drop from the 11% average seen in previous years.

???? The Ugly: The US Market & Valuation

US Losses: The American expansion is currently a $13.2M loss center. Same-store sales in the US fell 12.7%, suggesting the brand is struggling to find its footing in a market dominated by Chipotle.
The "Price for Perfection": Even after falling 27% in six months to $20.35, the stock still trades at an estimated 140x–150x P/E ratio. For context, if growth continues to slow, this multiple makes the stock highly vulnerable to further "derating" (price drops).
Short Seller Target: GYG remains one of the most shorted stocks on the ASX (13.8%). This means a large portion of the market is actively betting that the price will fall further.

The Verdict: It's a "Good" business trapped in an "Ugly" valuation. The market is disappointed because the company is performing like a very good restaurant chain, but it was priced like a world-conquering tech company.