Toast, Inc.

Based on the comprehensive analysis, TOST presents a mixed and cautious picture.

Technical Analysis shows the stock is in a severe downtrend, hitting 52-week lows with substantial declines. While it appears oversold and ripe for a technical bounce, the high beta indicates continued vulnerability to market swings, making any recovery fragile.

Fundamentally, the company has solid strengths, including robust revenue, minimal debt, and strong liquidity. However, concerns are growing due to margin contraction and weak operational returns (low ROE). The core business is healthy but showing signs of profitability pressure.

Valuation is a significant red flag. Extremely high P/E and EV/EBITDA ratios, coupled with a negative PEG ratio, suggest the stock is priced for perfection despite showing no clear path for substantial earnings growth. It appears richly valued relative to its current financial performance.

Overall, TOST is not a compelling buy at this time. While its strong balance sheet provides a safety net, the combination of weak technical momentum, profitability pressures, and excessive valuation creates significant headwinds. Investors should wait for either a more attractive valuation or clearer signs of fundamental improvement before considering a position.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, the 12-month outlook for TOST is cautious with a neutral to slightly bearish bias.

Key catalysts for a potential recovery would be a demonstrable improvement in profit margins and a reversal of the negative technical trend, which could trigger a relief rally from oversold conditions. The primary risks remain its rich valuation demanding near-perfect execution, persistent profitability pressures, and high sensitivity to broader market downturns. Given the lack of a clear near-term earnings growth catalyst and the current negative momentum, the stock is more likely to trade within a range of $22 to $32 over the next year, as the market seeks confirmation of fundamental improvement before justifying a higher valuation.

Wall Street Consensus

Most Wall Street analysts are optimistic about Toast, Inc.'s 12-month outlook, with consensus target around $27.64, indicating expected upside potential.

Overall, TOST has investment potential but also faces challenges. Here are key factors to weigh before investing.

TOST has delivered consistently weak performance with substantial declines across all measured timeframes.

The stock has declined sharply over both one-month (-15.63%) and three-month (-24.71%) periods, significantly underperforming the market by 26.56% over the past quarter while demonstrating high volatility with a beta of 1.934. This indicates the stock has been both declining aggressively and exhibiting greater downside risk than the broader market.

Currently trading near its 52-week low of $25.91 and far from its $49.66 high, the stock appears oversold after experiencing a maximum drawdown of -46.98% over the past year. Given its current depressed levels and substantial losses relative to its yearly range, the technical positioning suggests potential for stabilization unless fundamental conditions worsen further.

Revenue & Profitability: TOST demonstrates stable quarterly revenue of $1.63 billion but reveals margin pressures, with gross profit ratio declining from 26.5% to 25.7% quarter-over-quarter. The company maintains positive net income with a 6.2% net margin, though operating income ratio improved slightly to 5.5% in Q4 despite the gross margin compression.

Financial Health: TOST exhibits exceptional financial strength with minimal debt, reflected in a negligible debt ratio of 1.3% and debt-to-equity ratio of 1.9%. The company maintains robust liquidity with current and quick ratios above 2.6, supported by strong cash coverage ratios and positive operating cash flow.

Operational Efficiency: The company shows moderate operational efficiency with ROE of 4.8% and asset turnover of 0.52, indicating adequate utilization of resources. TOST maintains strong working capital management with a cash conversion cycle of just 12 days, though fixed asset turnover of 12.4 suggests effective utilization of capital investments.

Valuation Level Based on its trailing and forward PE ratios of 47.65 and 51.68, TOST appears richly valued, particularly given its negative PEG ratio of -9.30, which reflects a lack of expected earnings growth relative to its current earnings multiple. The elevated EV/EBITDA of 184.59 further underscores significant overvaluation, indicating weak cash flow generation relative to its enterprise value.

Peer Comparison A peer comparison cannot be conclusively drawn without industry benchmark data. However, TOST’s high multiples—both absolute and relative to typical software or technology valuations—suggest it trades at a premium. Without specific industry averages, it is challenging to determine whether this premium is justified by superior fundamentals or growth prospects.

The stock exhibits high volatility risk, as evidenced by its Beta of 1.934, implying it is approximately 93% more volatile than the broader market. This elevated sensitivity is further underscored by a substantial one-year maximum drawdown of -46.98%, indicating significant downside risk during recent unfavorable market conditions.

Regarding other risks, while the absence of reported short interest suggests that professional traders do not hold a strongly bearish consensus on the stock, this does not eliminate fundamental or operational risks. Investors should remain attentive to factors such as liquidity, competitive pressures, and the company's path to profitability.