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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| SEMR | -15.86% |
| SNOW | 15.48% |
| TSM | -1.89% |
vs. Fair Value Estimates
Buy List
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| TOST | 31.86% |
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| ADSK | 11.66% |
| NOW | 50.93% |
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| FTNT | 4.51% |
| TEAM | 14.85% |
vs. Fair Value Estimates