Guzman Y Gomez Ltd (ASX: GYG) shares have been under scrutiny since the Mexican fast-food company's initial public offering (IPO) in June. With its FY24 earnings result nearing, some investors may be wondering if it makes sense to invest sooner rather than later.
We can't know with any certainty how the market will react to the financial numbers reported. Analysts are forecasting a particular set of numbers, and if the report is stronger than expected, it can lead to a higher share price. Weaker-than-expected numbers can lead to declines, even if the actual numbers reported represent growth.
The market has already been given a good indication of what owners of Guzman Y Gomez shares may see in August because the IPO came with a set of forecasts.
What does GYG expect to report?
In terms of the key financials, the Mexican food business expects to report revenue of $339.7 million (up 31%) in FY24.
Statutory earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to decrease 14% to $25.4 million. The company expects statutory earnings before interest and tax (EBIT) to fall $9.7 million to a $5.6 million loss, and the statutory net loss is expected to drop $13.9 million to $16.2 million.
GYG also shared its pro forma numbers, which exclude some one-off costs, such as IPO offer costs.
Pro forma EBITDA for FY24 is expected to be $43 million (up 46.75%), pro forma EBIT is forecast to be $12 million (up 224%) and net profit after tax (NPAT) is projected to be $3.4 million (up 13.3%).
Guzman Y Gomez shares could be influenced by some of the other statistics. The Mexican food business expects to have 195 restaurants in Australia at the end of FY24, a 14% year-over-year increase.
Singapore network sales are expected to grow by 9.3% in FY24 to $47 million, and Japanese network sales are projected to rise by 14.3% to $8 million. Both of these markets are operated by master franchisees.
Should investors buy Guzman Y Gomez shares before the result?
The market clearly expects these numbers, so simply achieving those financials wouldn't necessarily lead to much of a change in share price.
It's possible that GYG may outperform the expectations it has set itself. But, with the company listing less than two weeks before the end of FY24, I believe the actual numbers will be similar to the projected numbers for FY24.
There's a danger the business may have been too optimistic about its potential growth in FY25. For the 2025 financial year, GYG is currently forecasting $59.9 million of EBITDA, $19.7 million of EBIT, and $6 million of NPAT. It's also possible it could outperform those expectations, particularly if comparable sales growth is better than expected.
I currently own a very small amount of GYG shares and would like to buy more. However, I wouldn't buy just because of the upcoming earnings results. Instead, I aim to invest during the next sizeable dip/decline of the Guzman Y Gomez share price when the valuation is more appealing.
