Stock Story -
Restaurant software platform Toast (NYSE:TOST) will be reporting results tomorrow after market hours. Here's what you need to know.
Toast beat analysts' revenue expectations by 3.3% last quarter, reporting revenues of $1.08 billion, up 31.3% year on year. It was a very strong quarter for the company, with a significant improvement in its gross margin and a solid beat of analysts' billings estimates.
Is Toast a buy or sell going into earnings? Find out by reading the original article on StockStory, it's free.
This quarter, analysts are expecting Toast's revenue to grow 25% year on year to $1.22 billion, slowing from the 44.9% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.10 per share.
The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Toast has only missed Wall Street's revenue estimates once over the last two years, exceeding top-line expectations by 3.3% on average.
Looking at Toast's peers in the vertical software segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Olo delivered year-on-year revenue growth of 27.6%, beating analysts' expectations by 4.1%, and Agilysys (NASDAQ:AGYS) reported revenues up 13.3%, falling short of estimates by 1.4%. Olo traded up 12.7% following the results while Agilysys was down 4.6%.
Read the full analysis of Olo's and Agilysys's results on StockStory.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 thanks to cooling inflation. 2024 has been a different story as mixed signals have led to market volatility, and while some of the vertical software stocks have fared somewhat better, they have not been spared, with share prices down 3.7% on average over the last month. Toast is down 3.6% during the same time and is heading into earnings with an average analyst price target of $27.8 (compared to the current share price of $24.49).
