Key Takeaways:
- Record Growth: Toast added a record 9,500 net new restaurant locations in Q2 2026, pushing total locations up 22% year over year to about 180,000.
- Price Projection: Based on current execution, TOST stock could reach $47 by December 2028.
- Potential Gains: This target implies a total return of 37% from the current price of $34.
- Annual Return: Investors could see roughly 15% annualized growth over the next 2.3 years.
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Toast (TOST) had a standout Q2 of 2026. Recurring gross profit grew 28% year over year, GAAP operating income margin expanded to 26%, and adjusted EBITDA jumped 38% to $221 million.
CEO Aman Narang says the company is pushing beyond point-of-sale software into AI agents that actually do work for restaurants, not just help manage it.
Toast IQ Grow, its new marketing agent, is on track to be the fastest product in company history to reach $10 million in annual recurring revenue.
The company also raised full-year guidance, now expecting recurring gross profit to grow 23-25% and adjusted EBITDA to rise from $805 million to $825 million, up from prior targets.
TOST trades around $34 today, below its 2025 highs, as investors weigh strong execution against near-term margin pressure from rising memory chip costs.
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What the Model Says for Toast Stock
Toast sells restaurant management software, payment processing, and hardware, and it’s expanding well beyond its original restaurant base.
New markets like enterprise, international, retail, and hospitality are scaling fast, with combined annual recurring revenue on track to nearly double to $200 million this year.
The bigger story is Toast IQ Grow. Instead of just selling software and letting restaurants figure out marketing themselves, Toast is using its data on 150,000-plus customers to build and run marketing campaigns directly.
Early results show restaurants using it are seeing real same-store sales growth, and management believes this points to a much larger opportunity: taking over services like payroll, bookkeeping, and scheduling that restaurants currently outsource elsewhere.
Rising memory chip costs have pressured hardware margins, but management has already taken steps like using older hardware generations and buying opportunistically in the spot market to offset the impact, and expects hardware margins to improve once memory prices stabilize.
Using a forecast of 19.0% annual revenue growth and 11.8% operating margins, our model projects the stock could rise to $47 within 2.3 years. This assumes a 21.1x price-to-earnings multiple, below TOST’s own one-year average of 25.8x.
Our Valuation Assumptions
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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 Toast stock:
1. Revenue Growth: 19%
Toast grew revenue 24.1% in 2025 and 31.1% annually over the last three years.
Full-year guidance calls for recurring gross profit growth of 23-25%, but total revenue growth (which includes lower-margin hardware) tends to run below that pace.
We’re assuming growth settles near 19% as the core business matures while new markets and AI products
2. Operating margins: 11.8%
Trailing twelve-month operating margin sits at 6.3%, already a sharp improvement from negative margins just a few years ago.
Management says the core business alone already runs above 40% margins, with company-wide profitability held back by ongoing investment in new markets and pressure on hardware costs.
We’re assuming steady margin expansion as those newer segments scale and memory costs normalize.
3. Exit P/E Multiple: 21.1x
TOST currently trades at 22.1x forward earnings. Note that five-, ten-, and fifteen-year multiples are not meaningful here since Toast was unprofitable for most of that period.
We’re holding the multiple roughly flat, reflecting a more mature growth stage as the company balances expansion with its stated long-term goal of reaching Rule of 60 performance (growth plus margin).
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What Happens If Things Go Better or Worse?
Restaurant technology companies scaling into new markets can see meaningfully different outcomes depending on execution. Here’s how TOST stock might perform under different scenarios through December 2030:
- Low Case: If revenue growth slows to 15.0% and net income margins settle at 9.7%, investors could still see a 37.3% total return, or about 7.6% annually.
- Mid Case: With 16.7% growth and 10.4% margins, we expect a total return of 78.7%, or roughly 14.4% annually.
- High Case: If AI products like Toast IQ Grow scale faster than expected, pushing revenue growth to 18.3% and margins to 10.9%, returns could reach 126.6% total, or about 20.8% annually.
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The spread between these outcomes largely depends on how quickly Toast’s new AI-driven products can move from early traction to meaningful revenue contribution, and how well the company manages memory cost pressure on hardware margins over the next few years.
How Much Upside Does Toast Stock Have From Here?
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All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
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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!
