Some Good, Some Bad In Toast's Q2
Aug 11, 2024
Toast, our restaurant management platform provider, reported a solid quarter on the face of it, with revenues up 27% and annual recurring revenue up 29%. Payment volume processed grew 26%, and total locations using the platform expanded 29%. These are all signs of a growing, healthy business. The firm achieved GAAP profitability for the first time, and free cash flow generation continues to strengthen. One concern is the share dilution rate - share count bloated by 11% this quarter. Investors have to be wary of this as it "waters down" the benefits of the company's growth for existing shareholders. Adjusting my model for it, I think a slight cut in the fair value is warranted. I'm lowering it by a buck down to $28.50. That said, Toast stock still looks buyable at current prices.
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Watch List
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| CMG | 40.33% |
| PSTG | -1.39% |
| WDAY | -5.41% |
| VEEV | 19.23% |
| INTU | 20.20% |
| RDDT | 16.57% |
| NTNX | 27.22% |
| CRWD | 95.83% |
| SE | 32.72% |
| SNOW | 13.92% |
vs. Fair Value Estimates
Buy List
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Hold List
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| VTEX | -13.76% |
| ODD | -6.91% |
| ASR | -24.09% |
| CELH | 39.84% |
| TOST | 18.60% |
| CPNG | -11.81% |
| HIMS | -5.43% |
| PAYC | -18.56% |
| MNDY | 21.64% |
| GLBE | -21.93% |
| ZS | 38.75% |
| V | -4.82% |
| ADSK | 1.57% |
| NOW | 15.34% |
| MELI | -19.68% |
| FTNT | 1.73% |
| TEAM | 0.14% |
vs. Fair Value Estimates