Key Takeaways:
- Toast is executing a comprehensive growth strategy focused on scaling its core restaurant business while expanding into enterprise, international, and food & beverage retail segments.
- TOST stock could reasonably reach $56/share by the end of 2027, based on our valuation assumptions.
- This implies a total return of 30% from today’s price of $43/share, with an annualized return of 12% over the next 2.4 years.
Toast (TOST) is transforming the restaurant technology landscape through strategic platform expansion and innovation-driven growth.
The fintech entity combines its core strengths in small and medium businesses with aggressive expansion into enterprise, international, and retail markets to capture the evolving needs of the food service industry.
The restaurant technology leader serves approximately 148,000 locations through its comprehensive platform ecosystem spanning point-of-sale, payments, capital, payroll, and operational tools.
This spans from independent restaurants through Toast’s core offering to enterprise brands via specialized solutions, and food retailers through dedicated vertical products.
TOST stock benefits from exceptional momentum, delivering record 8,500 net location additions and 35% recurring gross profit growth year-over-year.
It demonstrates a clear execution across all segments with new customer segments crossing 10,000 live locations and tracking toward $100 million in ARR collectively by year-end.
With Q2 results showing $161 million adjusted EBITDA and 35% margins while maintaining strong growth momentum, TOST stock positions for sustained expansion as platform innovations drive customer value and market penetration.
Here’s why TOST stock could deliver solid returns through 2027 as it scales market leadership and captures expanded addressable markets globally.
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What the Model Says for TOST Stock
We analyzed the upside potential for TOST stock using valuation assumptions based on its track record of execution and expanding market opportunity across restaurant technology segments.
While TOST stock is up over 70% in the past year, analysts see opportunity ahead given its comprehensive platform advantages, successful new market expansion, and systematic approach to scaling operations while maintaining strong unit economics across customer segments.
Toast’s diversified growth strategy provides multiple expansion vectors while its innovation pipeline validates that strong execution can drive market share gains and customer value creation in the restaurant technology category.
Based on estimates of 19.5% annual revenue growth, 11% operating margins, and a normalized P/E valuation multiple of 37.0x, the model projects TOST stock could rise from $43/share to $56/share.
That would be a 31% total return, or a 12% annualized return over the next 2.4 years.
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for TOST stock:
1. Revenue Growth: 20%
Toast delivered a strong Q2 performance with record location additions and 35% recurring gross profit growth while expanding across multiple new market segments simultaneously.
TOST expects momentum from platform innovation, including Toast Go 3 and ToastIQ capabilities, continued geographic expansion, and deeper customer adoption of the comprehensive product suite. The company maintains a disciplined investment approach while scaling go-to-market across segments.
We used a 19.5% forecast reflecting Toast’s proven ability to execute growth initiatives while building sustainable competitive advantages through technology innovation and market expansion.
2. Operating Margins: 11%
Toast achieved 35% adjusted EBITDA margins in Q2, demonstrating the scalable economics of its integrated restaurant technology platform business model.
A focus on operational efficiency through platform leverage and targeted investment supports margin expansion while funding product development and market expansion initiatives across core and new customer segments.
Management targets sustainable margin improvement while investing in strategic growth areas, reflecting disciplined capital allocation balancing profitability with market share capture and long-term competitive positioning.
3. Exit P/E Multiple: 37x
TOST stock trades at growth multiples reflecting its market leadership position and expanding addressable market opportunity across restaurant technology segments.
We maintain growth-oriented valuation levels given Toast’s platform advantages, proven execution across multiple market segments, and systematic approach to scaling operations while maintaining strong unit economics and customer satisfaction.
Long-term competitive advantages from technology innovation, comprehensive platform integration, and operational scale should support premium valuations as execution demonstrates sustained market leadership and profitable growth.
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What Happens If Things Go Better or Worse?
Different scenarios for Toast stock through 2030 show varied outcomes based on execution and market expansion success: (these are estimates, not guaranteed returns):
- Low Case: Slower new segment adoption and competitive pressure → 5.5% annual returns
- Mid Case: Successful platform expansion and market capture → 11.9% annual returns
- High Case: Strong growth across all segments and international expansion → 18.0% annual returns
Even in the conservative case, TOST stock offers reasonable returns supported by the company’s core market strength and proven ability to expand into new customer segments.
The upside scenario for TOST stock could deliver attractive performance if it successfully scales new market opportunities and captures significant market share through continued platform innovation and geographic expansion.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
