Key Stats for TOST Stock
- Past week performance: +6.8%
- 52-week range: $22.26 to $45.6
- Valuation model target price: $44.17
- Implied upside: 20.6% over 2.4 years
See how Toast’s AI-driven margin expansion could shape the next 5 years using TIKR’s new Valuation Model (It’s free) >>>
A Beat-and-Raise Quarter Built on Record Growth and AI
Toast (TOST) delivered a quarter that pushed the stock toward its 52-week high. Revenue rose 23.1% to $1.91 billion, beating estimates of $1.87 billion, while net income more than doubled from $80 million to $154 million. Annual recurring revenue grew 25% to $2.4 billion, so the underlying subscription base kept expanding fast.
The location growth number stood out most. Toast added a record 9,500 net new locations during the quarter, bringing its total to roughly 180,000, up 22% year over year. Recurring gross profit streams climbed 28%, and adjusted EBITDA jumped 38% to $221 million, with the margin expanding 240 basis points to 37%.
Management raised full-year guidance following the beat, and shares gained after the announcement. CEO Aman Narang framed the quarter as validation of Toast’s shift from a point-of-sale provider toward a broader agentic platform. “We have incredible momentum across the business, and I have never been more confident in the long term opportunity,” Narang said on the earnings call.
Toast IQ Grow, the company’s new AI marketing agent, is on track to become Toast’s fastest product ever to reach $10 million in annual recurring run-rate. If TOST stock is going to sustain this rally, expanding that AI product suite into payroll, scheduling, and bookkeeping will likely be the next proof point investors watch for.
See analysts’ growth forecasts and price targets for TOST (It’s free) >>>
Is TOST Stock Undervalued?
Under valuation model assumptions realized through 12/31/28, the stock is modeled using:
- Revenue Growth (CAGR): 18.0%
- Operating Margins: 9.2%
- Exit P/E Multiple: 23.9x
Based on these inputs, the model estimates a target price of $44.17, implying 20.6% total upside from the current share price and an 8.2% annualized return over the next 2.4 years.
An 8.2% annualized return sits in the moderately attractive range, well short of the 15% threshold that typically signals a deeply undervalued setup but comfortably above the 5% level that would flag limited upside. Given Toast just posted 23.1% quarterly revenue growth, the 18.0% CAGR assumption embedded in the model looks reasonable rather than aggressive.
Operating margins near 9.2% reflect a business still investing heavily in AI product development and hardware, even as GAAP operating margin already reached 26% this quarter on a reported basis. That gap suggests the model may be conservative on near-term profitability, since Toast is already demonstrating faster margin expansion than the assumption implies.
The 23.9x exit multiple looks roughly in line with Toast’s current NTM P/E near 23.9x, so the model isn’t assuming much multiple compression or expansion from today’s levels. Compared to its own three-year revenue CAGR of 31.1%, the model’s growth assumption reflects a natural deceleration as Toast’s location base matures.
Estimate a company’s fair value instantly (Free with TIKR) >>>
How Toast Stacks Up Against Shift4 and Block
Toast’s 23.1% quarterly revenue growth trailed Shift4 Payments (FOUR), which posted 34% gross revenue growth to $1.30 billion with a 46% adjusted EBITDA margin on gross revenue less network fees. Shift4’s diversified exposure to restaurants, hotels, and sports venues gives it a broader payments footprint than Toast’s restaurant-focused platform.
Against Block (XYZ), whose Square segment posted 13% gross profit growth to $1.16 billion on GPV of $72.8 billion, Toast’s growth rate looks considerably stronger. Toast’s 22% location growth also outpaced Square’s payment-volume growth, reflecting Toast’s continued penetration of the restaurant vertical specifically.
Toast’s restaurant-specific software can create stickier customer relationships than Block’s more horizontal payments platform, while Shift4 offers a useful benchmark for the profitability Toast could eventually achieve. The comparison highlights Toast’s growth advantage as well as its significant margin runway.
What’s Driving TOST Stock Going Forward?
Toast IQ Grow‘s expansion into new modules is the most immediate catalyst. Management said the platform will expand into voice ordering, scheduling, payroll, tax, and bookkeeping. These additions could meaningfully increase average revenue per location if adoption follows the marketing product’s early trajectory.
The enterprise and international push is scaling quickly too. Management said enterprise, international, and retail annual recurring revenue is on track to nearly double to $200 million in 2026. This follows new BWH Hotels partnerships and an expanded TGI Fridays relationship in the UK.
Retail expansion beyond restaurants adds a longer runway. Toast doubled its retail sales capacity over the past year, initially targeting grocery stores, convenience stores, and bottle shops. Management plans to enter additional subverticals as product-market fit develops.
Rising memory costs remain a modest headwind for hardware margins, though management is offsetting that through supply-chain actions and earlier hardware generations. The next earnings report in early November will show whether record location growth and AI product adoption can continue at this pace.
Should You Invest in Toast?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up TOST, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track TOST alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Analyze TOST stock on TIKR Free→
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!
