Evaluating Toast’s Valuation After Strong Q3 Results, Uber Partnership, and New AI Product Launches

Toast (NYSE:TOST) just posted its third-quarter financial results, reporting a jump in both revenue and profitability. The company also rolled out a new AI assistant and unveiled a strategic global partnership with Uber. These moves have definitely caught investor attention.

See our latest analysis for Toast.

Despite a choppy ride over the past few months, including a sharp pullback in the last quarter, Toast’s latest financial results and big-name partnerships appear to be restoring investor optimism, with a modest year-to-date share price return of 1.7%. While momentum has recently been soft, the three-year total shareholder return is still an impressive 80%, which suggests the market sees plenty of long-term potential.

If you’re on the lookout for other emerging tech stories with growth momentum, the next logical step is to discover fast growing stocks with high insider ownership

With shares still trading nearly 28% below the average analyst price target, the question is whether Toast is an overlooked bargain or if the market has already factored in its growth prospects. Could there be more upside ahead?

Most Popular Narrative: 23.5% Undervalued

The most popular narrative currently places Toast’s fair value at $48.38 per share, well above the latest closing price of $37. This sizable gap suggests Toast could be a significant opportunity for investors watching fast-growth tech stocks, but there is a lot packed into this forward-looking view.

Long-term challenges with labor shortages and wage pressures in hospitality drive restaurants to seek automation and operational efficiency. This increases demand for Toast's AI-driven tools (such as ToastIQ and Sous Chef) and productivity-enhancing hardware (Toast Go 3), which should support sustained revenue growth and improve net margins.

Read the complete narrative.

Why do analysts believe Toast justifies such a high valuation? The full narrative reveals bold forecasts around margin improvement, recurring software revenue, and what could be industry-defining growth. Want to see the numbers and logic pushing that fair value higher? The drivers may surprise you.

Result: Fair Value of $48.38 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising competition and ongoing margin pressures could quickly test these bullish assumptions, particularly if industry growth rates begin to cool.

Find out about the key risks to this Toast narrative.

Another View: Multiples Show Stretched Value

While many believe Toast is undervalued based on future discounted cash flows, a look at its price-to-earnings ratio presents a very different perspective. Toast trades at nearly 80 times earnings, which is significantly higher than both its industry average (13.1x) and its peer group (12.9x). This figure also stands well above its fair ratio of 22.8x. This substantial gap suggests the current share price could be risky if growth falters. Are investors getting ahead of themselves, or is there more upside left to justify this premium?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Toast Narrative

If you want to challenge these perspectives or make your own call guided by the data, you’re free to build a unique narrative in just a few minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Toast.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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