Goldman Sachs upgrades Alsea stock rating to neutral on valuation

Goldman Sachs raised Alsea SAB de CV's stock rating to neutral, citing valuation concerns in the firm's latest report. Analyst Thiago Bortoluci stated that the previous bearish outlook was due to the discretionary nature of the restaurant industry and the sensitivity of Mexican restaurant demand. Shares of Alsea fell 17% in U.S. dollar terms as consumption conditions worsened and management reduced its fiscal 2026 same-store sales guidance.

The valuation has since been better priced in, with Alsea trading at 8.2 times forward price-to-earnings ratio, which is cheaper than its own post-pandemic average, as well as Starbucks Corporation and Arcos Dorados. The stock appears to be undervalued, boasting a strong 36% free cash flow yield. Goldman Sachs believes Alsea is in a stronger strategic position, with a leaner portfolio, efforts to restart same-store sales growth, a focus on generating free cash flow, a better balance sheet, and lower cost of debt.

However, the firm warns that valuation remains a limitation for potential upside, and more visibility is required on the Mexican macro cycle and the turnaround of Starbucks Mexico before the stock can receive a more positive rating. Alsea reported weaker second-quarter earnings for 2026, with a 0.9% decline in total sales to MXN 20.21 billion and a 6.2% drop in EBITDA to MXN 2.8 billion.

Net income fell by 48.4%, reaching MXN 528 million. Despite these setbacks, Alsea showed improved underlying sales trends later in the period, with foreign exchange-adjusted sales up 3.5% and same-store sales growing by 2.6%.