In 2024, This High-Gear Equity Experienced a Doubling: Will It Soar Further in 2025?
In 2024, the stock market continued to impress, with the S&P 500 (SNPINDEX: ^GSPC) notching a 23% gain, marking an impressive two-year streak. Yet, one stock truly stood out, surging a staggering 100%. That's right, Toast (TOST 2.68%) showed an extraordinary performance, leaving investors craving for more.
Boasting strong financial results and a mission-critical role in the restaurant industry, Toast stood tall amidst the market's raging bullishness. With a 26% revenue growth in the first nine months of 2024 and 21,000 net new restaurant clients, the company's foundation was robust.
Toast's leadership team has traditionally prioritized growth over profitability. Despite this, the company showcased a remarkable improvement in Q3, reporting a net income of $56 million, a significant leap from the $31 million net loss in Q3 2023. The top line was rising at a brisk pace, while expense growth was under control, with a 11% increment in sales and marketing and R&D, and a 8% decrease in G&A expenses.
Toast's cloud-based financial services and software offerings make it an indispensable partner for restaurants, aiding in smoother operations and improved financial performance. One customer managed to cut payroll processing time by 90% and boost delivery speed to under 10 minutes, a testament to Toast's value proposition.
With competition from blockchain giants such as Block, Clover, and Lightspeed, Toast has managed to carve a niche, commanding a 14% share of all restaurant locations in the U.S., a figure that's rapidly increasing.
However, it's essential to tread cautiously, as the stock's 100% surge last year has sparked a feverish enthusiasm. Despite cooling slightly to a 17% drop from its 52-week high, the price-to-sales ratio has risen exponentially, reaching a 4.4. This enthusiasm has resulted in elevated expectations.
But is the stock truly overvalued? Analysts forecast 23% and 20% revenue growth for 2025 and 2026 respectively, with an expected EPS of $1.24 for 2026. Given Toast's growth trajectory, the valuation appears reasonable.
While Toast is undeniably an intriguing investment prospect, it's unwise to anticipate another 100% surge in 2025. Investors should temper their enthusiasm and focus on the stock's long-term performance.
To further boost its financial standing, Toast is exploring opportunities in international markets, aiming to expand its reach beyond the US. (money, finance)
Due to its impressive performance and growth potential, Toast has become a popular choice among investors looking to diversify their investing portfolios. (investing)
