TOST
TOSTToast provides cloud-based point-of-sale and restaurant management software for the foodservice industry.
It has established itself as an all-in-one technology platform, aiming to be an essential operating system for restaurants to streamline their operations and enhance customer engagement.
Updated: January 14, 2026, 16:00 EST
Investment Opinion: Should I buy TOST Today?
Based on the comprehensive analysis, here is a buy recommendation for TOST:
TOST presents a compelling but high-risk growth opportunity. The company's fundamental story is strong, with solid revenue growth, expanding profitability, and exceptional financial health marked by minimal debt and robust liquidity. However, the stock is richly valued, carrying a significant premium that requires substantial future growth to justify, and its high beta indicates it will be considerably more volatile than the market.
For investors with a higher risk tolerance and a long-term horizon, the current price—sitting roughly 30% below its yearly high—may represent a favorable entry point into a company with solid operational execution. The key is believing that TOST can continue its growth trajectory to eventually grow into its current valuation. Therefore, a cautious buy rating is recommended for those comfortable with its volatility.
*This is not investment advice, for reference only.*
TOST 12-Month Price Forecast
RockFlow Model Forecast: Three Scenarios for 2026
Based on the provided analysis, here is a 12-month outlook for Toast (TOST):
12-Month Outlook for TOST
The primary catalyst will be TOST's ability to consistently meet or exceed high growth expectations to justify its premium valuation; continued market share gains in the restaurant software sector and expansion of its product ecosystem are key to this. The most significant risk is its high valuation multiple, which makes the stock highly sensitive to any growth disappointments or a broader market shift away from expensive, unprofitable tech names, amplified by its high beta. Given the lack of a specific analyst target and the stock's inherent volatility, a realistic 12-month price target range is broad, likely between $28 and $45, heavily dependent on market sentiment and quarterly execution.
Wall Street Consensus
Most Wall Street analysts are optimistic about TOST's 12-month outlook, with consensus target around $35.66, indicating expected upside potential.
Bulls vs Bears: TOST Investment Factors
Overall, TOST has investment potential but also faces challenges. Here are key factors to weigh before investing.
Bullish
- Strong Q3 Results: Company reported solid earnings and issued a positive outlook.
- Analyst Confidence: Wall Street analysts maintain a 'Buy' rating on the stock.
- Market Outperformance: Stock has recently beaten the S&P 500's performance.
- Positive Momentum: Shares climbed significantly on strong investor sentiment.
- Rebound Potential: Identified as a stock with potential to bounce back in 2026.
Bearish
- Recent Price Volatility: Stock experienced a sharp 4.54% drop in a single session.
- Valuation Concerns: Some investors question if the stock is overhyped.
- Market Sensitivity: Performance can be inconsistent compared to broader market indices.
- Profitability Scrutiny: Long-term value is under assessment post-stock price decline.
TOST Technical Analysis
TOST has demonstrated weak performance recently, underperforming the broader market over the past three months. The stock has experienced a significant maximum drawdown of nearly 34% over the past year, indicating substantial volatility and downside risk during this period.
Over the short term, TOST has declined approximately 3% over one month and nearly 6% over three months, significantly underperforming the market by almost 9 percentage points during the latter period. The stock's high beta of 1.94 confirms its elevated volatility, moving almost twice as much as the overall market, which has amplified its recent losses despite market conditions.
Currently trading at $34.80, TOST sits approximately 24% above its 52-week low but remains 30% below its yearly high, positioning it in the lower-middle portion of its annual range. This placement suggests the stock is approaching potentially oversold territory, particularly given its substantial decline from recent highs, though continued negative momentum warrants caution.
| Period | TOST Return | S&P 500 |
|---|---|---|
| 1m | +1.1% | +1.3% |
| 3m | +1.9% | +5.7% |
| 6m | -20.1% | +10.6% |
| 1y | -2.5% | +16.5% |
| ytd | +4.8% | +1.1% |
TOST Fundamental Analysis
Revenue & Profitability TOST demonstrates solid revenue growth, increasing from $1.55B to $1.63B quarter-over-quarter, while maintaining profitability with improvements in key margins. The gross profit ratio expanded to 26.5% in Q3 from 25.3% in Q2, and the net income ratio improved to 6.4%, indicating effective cost management and scalable operations despite ongoing investments.
Financial Health The company maintains exceptional financial health with minimal debt, evidenced by a negligible debt ratio of 0.6% and a debt-to-equity ratio below 0.01. Strong liquidity is reflected in robust current and quick ratios above 2.6, supported by a healthy cash position and positive operating cash flow, providing significant financial flexibility.
Operational Efficiency Operational efficiency is strong, with an ROE of 5.2% and an asset turnover of 0.55, indicating decent returns on shareholder equity and effective asset utilization. The company exhibits excellent working capital management through a quick cash conversion cycle of 10.7 days, driven by high receivables and inventory turnover rates.
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Level
TOST appears significantly overvalued based on traditional metrics. The trailing PE ratio of 74.95 and forward PE of 50.85 are exceptionally high, indicating investors are paying a substantial premium for its earnings. This is further supported by a lofty PB ratio of 10.16 and an EV/EBITDA of nearly 170, which suggest the market capitalization is richly valued relative to both its book value and operational cash flow. A PEG ratio of 1.78, while not extremely high, confirms the stock's price is not justified by its earnings growth rate, pointing to an elevated valuation level.
Peer Comparison
A direct peer comparison is hindered by the lack of provided industry average data. However, a PS ratio of 3.49 could be considered moderate for a technology or software company, potentially indicating that the sales multiple is not the primary concern. The extreme multiples in earnings-based metrics (PE, EV/EBITDA) strongly suggest that TOST is valued at a significant premium compared to typical market valuations, and its attractiveness is highly dependent on achieving exceptional future growth to justify its current price.
Investment Risk Disclosure
Volatility Risk
TOST exhibits high volatility risk, as evidenced by its elevated Beta of 1.939, implying it is approximately 94% more volatile than the broader market. This substantial market sensitivity is further confirmed by a significant one-year maximum drawdown of -33.87%, indicating the stock has experienced considerable price declines from its peak. Investors should be prepared for pronounced price swings and substantial downside potential relative to the overall market.
Other Risks
The lack of reported short interest could suggest a consensus view or limited bearish sentiment, but it may also mask underlying liquidity risks if the stock's trading volume is insufficient. While the absence of heavy shorting pressure is generally positive, low liquidity can exacerbate volatility and lead to wider bid-ask spreads, increasing transaction costs. Overall, the primary risks appear to be driven by its inherent high volatility rather than external speculative pressures.
FAQs
Opinion: Neutral, leaning cautiously optimistic for long-term growth investors.
Core Reasons: 1. Strong Fundamentals vs. Rich Valuation: The company exhibits excellent revenue growth, improving profitability, and a rock-solid balance sheet. However, these positives are counterbalanced by a very high valuation (e.g., PE ~75), which prices in near-perfect execution. 2. High Volatility: The stock's high beta (1.94) and significant drawdowns mean it carries substantially more risk than the overall market, making it unsuitable for risk-averse investors.
Suitable Investor Types: This stock is best suited for aggressive, long-term growth investors who are comfortable with high volatility and believe the company can grow into its lofty valuation over many years. It is not appropriate for value seekers or those with a short-term horizon.
Based on the provided data, TOST stock appears overvalued. Key valuation metrics like its trailing P/E of 74.95 and forward P/E of 50.85 are exceptionally high, indicating a substantial premium relative to its current and near-term earnings. Furthermore, a PEG ratio of 1.78 suggests the stock's price is not fully justified by its earnings growth rate. While the company demonstrates strong fundamentals—including solid revenue growth, profitability, and a healthy balance sheet—the current stock price seems to be pricing in near-perfect execution of its high growth expectations, leaving little margin for error.
Of course. Based on the provided information, here are the key risks of holding TOST stock, ordered by importance.
1. High Volatility and Significant Drawdown Risk: The stock's high beta of 1.94 means its price is nearly twice as volatile as the broader market, which has recently manifested in a substantial one-year maximum drawdown of -33.87% and significant underperformance against the market over the past three months. 2. Negative Price Momentum and Technical Weakness: The stock is currently demonstrating bearish momentum, having declined approximately 6% over three months while underperforming the market by almost 9 percentage points, and it remains 30% below its yearly high, indicating persistent selling pressure. 3. Potential Liquidity and Market Sentiment Risk: The lack of reported short interest, while seemingly positive, may mask underlying liquidity risks; if trading volume is insufficient, it can exacerbate the inherent volatility, lead to wider bid-ask spreads, and increase transaction costs for investors. 4. Operational Execution Risk Amid Growth: Despite solid revenue growth and profitability, the company's modest Return on Equity (ROE) of 5.2% suggests that future stock appreciation is highly dependent on flawlessly executing its growth strategy and further improving operational efficiency to generate stronger returns for shareholders.
Of course. Here is a professional forecast for Toast (TOST) stock performance through 2026.
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**Toast (TOST) Stock Forecast for 2026**
Based on a continuation of its current growth trajectory and market expansion, Toast is projected to see significant appreciation by 2026.
1. 2026 Target Price Range: * Base Case (~$65): Assumes steady market penetration, successful execution of new product offerings, and a moderated valuation multiple as the company scales. * Bull Case (~$90+): Requires Toast to significantly outperform by capturing a dominant share of the restaurant software market, demonstrating sustained high revenue growth, and expanding profitability margins ahead of expectations.
2. Key Growth Drivers: * Market Share Expansion: Continued displacement of legacy point-of-sale systems and penetration into larger enterprise-scale restaurant chains. * Product Ecosystem Growth: Increased adoption and revenue from high-margin software modules like payroll, lending, and reservation management. * International Expansion: Successful scaling of operations beyond the U.S. market, representing a substantial untapped opportunity.
3. Main Assumptions: * The company maintains its competitive moat and does not face significant disruption from larger players. * The broader market environment remains supportive of growth-oriented technology stocks. * TOST continues to post strong double-digit revenue growth while improving its path to sustainable profitability.
4. Uncertainty of the Forecast: This forecast is highly sensitive to execution and market sentiment. Key risks include intense competition, a potential economic downturn affecting restaurant spending, and compression of its valuation multiples if growth decelerates. The wide target range reflects this inherent volatility.