Toast Upgraded Amid Strong Q4 Results and Growth Potential
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 08 2026
0mins
Should l Buy TOST?
Source: Fool
Toast Inc. shares fell 5.50% and hit a 52-week low amid broader market weakness, with the Nasdaq-100 down 0.59% and the S&P 500 down 0.40%.
Despite the stock's decline, Toast received an upgrade from Bernstein, moving from market perform to outperform, as the company reported a significant 22% year-over-year revenue growth in Q4, reaching $1.63 billion. The strong performance was driven by a 28% increase in subscription revenue and the addition of approximately 8,000 new restaurant clients in the quarter, indicating robust growth potential in the restaurant management software market.
The upgrade reflects confidence in Toast's future growth, especially as it expands its customer base and explores new verticals. Investors are optimistic about the company's strategic planning and projected gross profit growth from subscription services and fintech, which is expected to increase between 20% and 22% by 2026.
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Analyst Views on TOST
Wall Street analysts forecast TOST stock price to rise
21 Analyst Rating
13 Buy
8 Hold
0 Sell
Moderate Buy
Current: 27.750
Low
36.00
Averages
47.00
High
60.00
Current: 27.750
Low
36.00
Averages
47.00
High
60.00
About TOST
Toast, Inc. is a cloud-based, all-in-one digital technology platform purpose-built for the entire restaurant community. It provides a platform of software-as-a-service (SaaS) products and financial technology solutions, including integrated payment processing, restaurant-grade hardware, and a broad ecosystem of third-party partners. It serves as the restaurant operating system, connecting front of house and back of house operations across service models including dine-in, takeout, delivery, catering, and retail. Its products include point-of-sale (POS) & restaurant operations, marketing, online ordering & delivery, team management, vendor management, retail, and financial technology solutions. Its in-store POS and restaurant operations offerings are built to help reduce time to take an order, optimize operations, and handle payments. Its marketing products provide integrated solutions to deliver targeted email and SMS campaigns, build loyalty programs, offer gift cards, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Investment Insights: MercadoLibre and Toast as Growth Stocks
- MercadoLibre Growth Momentum: Currently, MercadoLibre's stock is down 34% from its all-time high, yet it achieved a 45% year-over-year revenue growth in Q4 2025, marking its 28th consecutive quarter of over 30% growth, demonstrating a strong business flywheel effect, and despite trading at its lowest price-to-sales ratio since the Great Recession, it is still seen as a prime investment opportunity.
- User Growth and Market Share: The fintech user base for MercadoLibre grew by 27% in Q4, reaching 78 million users, which propelled a 37% increase in gross merchandise volume on its platform, indicating that the synergy among its various business segments is strengthening, further solidifying its leadership position in the Latin American e-commerce market.
- Toast's Profit Potential: In Q4 2025, Toast's annual recurring revenue (ARR) hit $2 billion, growing 26% year-over-year, with its subscription software solutions boasting a gross margin of 70%, showcasing strong growth potential in the restaurant technology sector; although initial customer acquisition impacts profits, it is expected to convert into a long-term profitability advantage.
- Market Competition and Valuation: Toast's stock has fallen nearly 50% from its highs, currently trading at 2.5 times sales; despite facing fierce market competition, management believes it has a path to achieving $10 billion in ARR, indicating an optimistic growth outlook in the restaurant industry.
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- Earnings Miss: DoorDash's fourth-quarter earnings fell short of expectations, causing shares to drop 12% in after-hours trading; however, CEO Tony Xu's optimistic outlook led to a 2% recovery in the following session, reflecting market confidence in the company's long-term growth.
- Analyst Optimism: Analysts predict a 45% upside for DoorDash's stock, with 36 analysts rating it as either a strong buy or buy, indicating a positive outlook on its international business and grocery delivery growth potential.
- Strategic Importance of Deliveroo Investment: While the investment in Deliveroo is seen as a short-term burden, analysts believe it opens significant opportunities for DoorDash's international expansion in Europe, particularly in automation and new product development.
- Competitive Advantage: Xu emphasized DoorDash's edge in offering diverse choices, arguing that even with Amazon's competition, the ability to provide options from multiple independent retailers will sustain growth, and analysts are optimistic about its potential in restaurant reservations and personalized recommendations.
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ValueAct Capital Increases Stake in Toast
- Increased Stake in Toast: ValueAct Capital Management has more than doubled its position in restaurant software provider Toast, reflecting strong confidence in the company's growth potential, particularly amid ongoing platform innovations.
- Strong User Growth: Toast added 8,000 net locations in Q4, a 22% year-over-year increase, and 30,000 for the year, serving approximately 164,000 restaurants, indicating rising market penetration and customer demand.
- International Market Expansion: Toast is expanding into adjacent markets such as quick-service restaurants and hotels, and has begun gaining traction in international markets, further enhancing its growth outlook.
- Attractive Valuation: With projected annual recurring revenue (ARR) of $2.3 billion by 2026, Toast's enterprise value-to-ARR multiple is just over 6 times, highlighting the stock's investment appeal amid its sustained growth trajectory.
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ValueAct Increases Stake in Toast Amid SaaS Sell-off
- Increased Stake: ValueAct Capital Management significantly increased its stake in Toast by more than doubling its position in Q4 2023, reflecting confidence in the company's growth potential despite its stock being affected by the recent SaaS sell-off.
- Strong Growth: Toast added 8,000 net locations in Q4, representing a 22% year-over-year increase, and 30,000 for the year, serving approximately 164,000 restaurants, indicating a sustained increase in market penetration within the restaurant industry.
- International Expansion: The company is expanding into adjacent markets such as quick-service restaurants, coffee shops, and hotels, and has started gaining traction in international markets, further enhancing its growth potential.
- Attractive Valuation: With a projected annual recurring revenue (ARR) of $2.3 billion by 2026, Toast's enterprise value-to-ARR multiple is just over 6 times, indicating an attractive valuation that makes it a compelling buy for investors.
See More
Three Growth Stocks to Buy After Recent Sell-Offs
- DoorDash Business Growth: DoorDash's stock has fallen approximately 38% since October 2025; however, its Q4 revenue surged 38% year-over-year to $29.7 billion, with earnings soaring 51% to $213 million, demonstrating strong performance in its diversified business, particularly in third-party retailer fulfillment services.
- ServiceNow Market Rebound: ServiceNow's stock is nearly 50% below its record high from last summer, yet CEO Bill McDermott emphasized in the Q4 earnings call that enterprise AI will be a major driver of the multi-trillion-dollar investment cycle, and he personally invested $3 million in company stock, reflecting confidence in future growth.
- Toast Expansion Momentum: Toast's stock has plummeted 44% since August 2025, but it added 30,000 new restaurant clients in 2025, with 8,000 in Q4, and its annual recurring revenue (ARR) grew 26% year-over-year to $2 billion, indicating strong growth potential in the restaurant sector.
- Valuation Appeal: Despite market pressures, Toast's price-to-earnings growth (PEG) ratio is only 0.25, suggesting an attractive valuation, and the company is expanding into new verticals like food and beverage retail, further enhancing its competitive position in the market.
See More
Toast's Integrated POS Platform Fuels Growth Potential
- Platform Integration Advantage: Toast enhances enterprise adoption through its integrated Point of Sale (POS) platform, which is expected to drive revenue growth in the coming quarters and strengthen its market competitiveness.
- Rising Enterprise Adoption: As more businesses adopt Toast's solutions, the company's market share is likely to expand further, laying a foundation for long-term growth, although current profitability remains unclear.
- New Vertical Market Expansion: Toast is actively exploring new verticals, leveraging its technological advantages and industry experience to attract more customers and improve overall business performance, thereby enhancing its position in the industry.
- Investor Focus on Profitability Trends: Despite Toast's strong growth potential, investors are still waiting for clearer profitability trends to make more informed investment decisions, which may impact short-term stock performance.
See More
Investment Insights: MercadoLibre and Toast as Growth Stocks
- MercadoLibre Growth Momentum: Currently, MercadoLibre's stock is down 34% from its all-time high, yet it achieved a 45% year-over-year revenue growth in Q4 2025, marking its 28th consecutive quarter of over 30% growth, demonstrating a strong business flywheel effect, and despite trading at its lowest price-to-sales ratio since the Great Recession, it is still seen as a prime investment opportunity.
- User Growth and Market Share: The fintech user base for MercadoLibre grew by 27% in Q4, reaching 78 million users, which propelled a 37% increase in gross merchandise volume on its platform, indicating that the synergy among its various business segments is strengthening, further solidifying its leadership position in the Latin American e-commerce market.
- Toast's Profit Potential: In Q4 2025, Toast's annual recurring revenue (ARR) hit $2 billion, growing 26% year-over-year, with its subscription software solutions boasting a gross margin of 70%, showcasing strong growth potential in the restaurant technology sector; although initial customer acquisition impacts profits, it is expected to convert into a long-term profitability advantage.
- Market Competition and Valuation: Toast's stock has fallen nearly 50% from its highs, currently trading at 2.5 times sales; despite facing fierce market competition, management believes it has a path to achieving $10 billion in ARR, indicating an optimistic growth outlook in the restaurant industry.
See More
DoorDash Stock Volatility Highlights Growth Potential
- Earnings Miss: DoorDash's fourth-quarter earnings fell short of expectations, causing shares to drop 12% in after-hours trading; however, CEO Tony Xu's optimistic outlook led to a 2% recovery in the following session, reflecting market confidence in the company's long-term growth.
- Analyst Optimism: Analysts predict a 45% upside for DoorDash's stock, with 36 analysts rating it as either a strong buy or buy, indicating a positive outlook on its international business and grocery delivery growth potential.
- Strategic Importance of Deliveroo Investment: While the investment in Deliveroo is seen as a short-term burden, analysts believe it opens significant opportunities for DoorDash's international expansion in Europe, particularly in automation and new product development.
- Competitive Advantage: Xu emphasized DoorDash's edge in offering diverse choices, arguing that even with Amazon's competition, the ability to provide options from multiple independent retailers will sustain growth, and analysts are optimistic about its potential in restaurant reservations and personalized recommendations.
See More
ValueAct Capital Increases Stake in Toast
- Increased Stake in Toast: ValueAct Capital Management has more than doubled its position in restaurant software provider Toast, reflecting strong confidence in the company's growth potential, particularly amid ongoing platform innovations.
- Strong User Growth: Toast added 8,000 net locations in Q4, a 22% year-over-year increase, and 30,000 for the year, serving approximately 164,000 restaurants, indicating rising market penetration and customer demand.
- International Market Expansion: Toast is expanding into adjacent markets such as quick-service restaurants and hotels, and has begun gaining traction in international markets, further enhancing its growth outlook.
- Attractive Valuation: With projected annual recurring revenue (ARR) of $2.3 billion by 2026, Toast's enterprise value-to-ARR multiple is just over 6 times, highlighting the stock's investment appeal amid its sustained growth trajectory.
See More
ValueAct Increases Stake in Toast Amid SaaS Sell-off
- Increased Stake: ValueAct Capital Management significantly increased its stake in Toast by more than doubling its position in Q4 2023, reflecting confidence in the company's growth potential despite its stock being affected by the recent SaaS sell-off.
- Strong Growth: Toast added 8,000 net locations in Q4, representing a 22% year-over-year increase, and 30,000 for the year, serving approximately 164,000 restaurants, indicating a sustained increase in market penetration within the restaurant industry.
- International Expansion: The company is expanding into adjacent markets such as quick-service restaurants, coffee shops, and hotels, and has started gaining traction in international markets, further enhancing its growth potential.
- Attractive Valuation: With a projected annual recurring revenue (ARR) of $2.3 billion by 2026, Toast's enterprise value-to-ARR multiple is just over 6 times, indicating an attractive valuation that makes it a compelling buy for investors.
See More
Three Growth Stocks to Buy After Recent Sell-Offs
- DoorDash Business Growth: DoorDash's stock has fallen approximately 38% since October 2025; however, its Q4 revenue surged 38% year-over-year to $29.7 billion, with earnings soaring 51% to $213 million, demonstrating strong performance in its diversified business, particularly in third-party retailer fulfillment services.
- ServiceNow Market Rebound: ServiceNow's stock is nearly 50% below its record high from last summer, yet CEO Bill McDermott emphasized in the Q4 earnings call that enterprise AI will be a major driver of the multi-trillion-dollar investment cycle, and he personally invested $3 million in company stock, reflecting confidence in future growth.
- Toast Expansion Momentum: Toast's stock has plummeted 44% since August 2025, but it added 30,000 new restaurant clients in 2025, with 8,000 in Q4, and its annual recurring revenue (ARR) grew 26% year-over-year to $2 billion, indicating strong growth potential in the restaurant sector.
- Valuation Appeal: Despite market pressures, Toast's price-to-earnings growth (PEG) ratio is only 0.25, suggesting an attractive valuation, and the company is expanding into new verticals like food and beverage retail, further enhancing its competitive position in the market.
See More
Toast's Integrated POS Platform Fuels Growth Potential
- Platform Integration Advantage: Toast enhances enterprise adoption through its integrated Point of Sale (POS) platform, which is expected to drive revenue growth in the coming quarters and strengthen its market competitiveness.
- Rising Enterprise Adoption: As more businesses adopt Toast's solutions, the company's market share is likely to expand further, laying a foundation for long-term growth, although current profitability remains unclear.
- New Vertical Market Expansion: Toast is actively exploring new verticals, leveraging its technological advantages and industry experience to attract more customers and improve overall business performance, thereby enhancing its position in the industry.
- Investor Focus on Profitability Trends: Despite Toast's strong growth potential, investors are still waiting for clearer profitability trends to make more informed investment decisions, which may impact short-term stock performance.
See More
