DMP Charts, page-56

The broker UBS believes Domino's profitability can materially recover in FY25 after its inflation and post-COVID difficulties.

UBS has forecast Domino's can generate $244 million of EBIT in FY25 (a rise of $30 million compared to the estimate for FY24). At the current Domino's share price, it's valued at 13.5x FY25's estimated EBIT.

Clearly, Domino's is a lot cheaper than Guzman Y Gomez based on FY25's predicted profitability. The Domino's share price is down close to 40% this year, so it could be a contrarian opportunity at the current value.

Of course, GYG's EBIT is still at a low base. Adding $10 million, for example, of EBIT in FY26 wouldn't be much in dollar terms, but it would represent a 50% increase in percentage terms and help normalise the Guzman Y Gomez EBIT multiple.