Toast (NYSE:TOST) shareholders have endured a 11% loss from investing in the stock a year ago

·3 min read

It's understandable if you feel frustrated when a stock you own sees a lower share price. But sometimes broader market conditions have more of an impact on prices than the actual business performance. The Toast, Inc. (NYSE:TOST) share price is down 11% in the last year. However, that's better than the market's overall decline of 12%. Because Toast hasn't been listed for many years, the market is still learning about how the business performs. The last month has also been disappointing, with the stock slipping a further 33%. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

See our latest analysis for Toast

Because Toast made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Toast grew its revenue by 60% over the last year. That's well above most other pre-profit companies. While the share price is down 11% in the last year, not too bad given the weak market. The relative resilience of the share price might reflect the strong revenue growth. Given the strong growth in revenue, this could be an opportunity for long-term focussed growth investors, assuming the stock has the resources to reach profitability. 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).


We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. You can see what analysts are predicting for Toast in this interactive graph of future profit estimates.

A Different Perspective

Having lost 11% over the year, Toast has generated a return within the same ballpark as the broader market. Given that the share price has continued to slide (by 7.2%) in the last three months, it's hard to know when we might see the bottom. Most people would be understandably disheartened by this sort of performance, given the lack of a long term history. It's always interesting to track share price performance over the longer term. But to understand Toast better, we need to consider many other factors. Even so, be aware that Toast is showing 3 warning signs in our investment analysis , you should know about...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

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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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