Stock Analysis

Shareholders in Toast (NYSE:TOST) are in the red if they invested a year ago

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Most people feel a little frustrated if a stock they own goes down in price. But sometimes broader market conditions have more of an impact on prices than the actual business performance. Over the year the Toast, Inc. (NYSE:TOST) share price fell 13%. But that actually beats the market decline of 13%. Toast may have better days ahead, of course; we've only looked at a one year period. Unfortunately the last month hasn't been any better, with the share price down 34%. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.

Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

Check out our latest analysis for Toast

Given that Toast didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year Toast saw its revenue grow by 60%. That's a strong result which is better than most other loss making companies. Given that the broader market is down the 13% drop last year isn't too bad. Given the strong revenue growth, it may simply be that the stock is suffering from market conditions. For us, this sort of situation smells of opportunity - the share price is down but the revenue is up. Either way, we'd say the mismatch between the revenue growth and the share price justifies a closer look.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

NYSE:TOST Earnings and Revenue Growth March 18th 2023

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free report showing analyst forecasts should help you form a view on Toast

A Different Perspective

Having lost 13% over the year, Toast has generated a return within the same ballpark as the broader market. Unfortunately, last year's performance may indicate unresolved challenges, and the share price has continued to drop, down 8.8% over the last three months. Most people would be understandably disheartened by this sort of performance, given the lack of a long term history. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should be aware of the 3 warning signs we've spotted with Toast .

Of course Toast may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

What are the risks and opportunities for Toast?

Toast, Inc. operates a cloud-based digital technology platform for the restaurant industry in the United States and Ireland.

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  • Revenue is forecast to grow 18.66% per year

  • Revenue grew by 60.2% over the past year


  • Shareholders have been diluted in the past year

  • Significant insider selling over the past 3 months

  • Currently unprofitable and not forecast to become profitable over the next 3 years

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