Value
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.9 |
| P/S | 8.4 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 6.5 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 19.6x
- ▸PEG: 0.20
TOST · Why this verdict
Why Toast (TOST) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.0/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Toast has delivered four consecutive earnings beats with an average positive surprise of 18.3% and 22% year-over-year revenue growth, supported by 143% free cash flow conversion, yet the stock trades below its 200-day moving average with a confirmed downtrend, creating a tension between strong fundamentals and weak near-term technicals. Analyst consensus implies 22% upside to $30.49.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Toast delivered 22% year-over-year revenue growth, ranking it among the higher-growth companies in the software infrastructure space, suggesting the restaurant technology platform is capturing meaningful share in a large addressable market. Growth breakdown | Revenue growth remains above 15% year over year for at least the next 2 reported quarters. | →Stable |
| CounterSoftware-infrastructure companies with 22% growth often trade at premium multiples; Toast's forward price-to-earnings of 14.8x is not expensive by software standards but reflects market uncertainty about the durability of restaurant-sector spend. | ||
Toast beat earnings estimates in all four of the last four quarters with an average positive surprise of 18.3%, demonstrating consistent management execution and a business model that is outperforming external expectations. Earnings | Earnings beats continue in at least 3 of the next 4 quarters with an average positive surprise above 10%. | ↑Improving |
| CounterA 4-for-4 beat streak can reflect conservatively set estimates rather than fundamental outperformance; as the analyst community recalibrates, the bar rises and surprise magnitudes typically compress. | ||
Free cash flow conversion of 143% of net income and a Piotroski F-Score of 7 out of 9 indicate that Toast's earnings are high-quality and backed by strong cash generation, reducing the risk of earnings being inflated by accounting items. Quality breakdown | Free cash flow conversion remains above 100% of net income over the next four quarters. | →Stable |
| CounterHigh free cash flow relative to net income in growth-phase software companies can reflect deferred revenue and stock-based compensation adjustments rather than pure cash generation, which may normalize as growth slows. | ||
The stock is in a technical recovery phase — the death cross remains but MACD is improving and RSI is at 58 — with the stock below its 200-day moving average on a -8.8%/30-day slope, suggesting the path to technical recovery still requires price to reclaim key moving averages. Momentum breakdown | Price rises above the 200-day moving average within 9 months as fundamental momentum supports technical recovery. | ↓Deteriorating |
| CounterStocks in confirmed downtrends with death crosses frequently continue lower before recovering; relying on a MACD improvement as a reversal signal has a high false-positive rate in bearish tape environments. | ||
Toast delivered 22% year-over-year revenue growth, ranking it among the higher-growth companies in the software infrastructure space, suggesting the restaurant technology platform is capturing meaningful share in a large addressable market.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 15% year over year for at least the next 2 reported quarters.
CounterSoftware-infrastructure companies with 22% growth often trade at premium multiples; Toast's forward price-to-earnings of 14.8x is not expensive by software standards but reflects market uncertainty about the durability of restaurant-sector spend.
Toast beat earnings estimates in all four of the last four quarters with an average positive surprise of 18.3%, demonstrating consistent management execution and a business model that is outperforming external expectations.
↑ImprovingEarnings
- Expectation
- Earnings beats continue in at least 3 of the next 4 quarters with an average positive surprise above 10%.
CounterA 4-for-4 beat streak can reflect conservatively set estimates rather than fundamental outperformance; as the analyst community recalibrates, the bar rises and surprise magnitudes typically compress.
Free cash flow conversion of 143% of net income and a Piotroski F-Score of 7 out of 9 indicate that Toast's earnings are high-quality and backed by strong cash generation, reducing the risk of earnings being inflated by accounting items.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 100% of net income over the next four quarters.
CounterHigh free cash flow relative to net income in growth-phase software companies can reflect deferred revenue and stock-based compensation adjustments rather than pure cash generation, which may normalize as growth slows.
The stock is in a technical recovery phase — the death cross remains but MACD is improving and RSI is at 58 — with the stock below its 200-day moving average on a -8.8%/30-day slope, suggesting the path to technical recovery still requires price to reclaim key moving averages.
↓DeterioratingMomentum breakdown
- Expectation
- Price rises above the 200-day moving average within 9 months as fundamental momentum supports technical recovery.
CounterStocks in confirmed downtrends with death crosses frequently continue lower before recovering; relying on a MACD improvement as a reversal signal has a high false-positive rate in bearish tape environments.
Per-dimension breakdown
Quality
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.4 |
| ROA | 6.0 |
| Gross margin | 1.3 |
| Op margin | 3.0 |
| Net margin | 3.6 |
| Current ratio | 8.2 |
| FCF quality | 6.9 |
| Moat | 6.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 25%
- ▸Strong Piotroski F-Score: 8/9
Growth
9.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 8.3 |
| EPS growth | 10.0 |
- ▸Strong growth: 23% YoY
Momentum
2.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 5.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 2.5 |
| Analyst rating | 7.5 |
| Price target | 6.9 |
- ▸LLM news sentiment: -0.50 (n=5)
Insider
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 9.0 |
| notable moves | 5.0 |
- ▸Modest insider selling — $17,601,271 (0.089% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.0 |
| quality rank | 5.8 |
| growth rank | 6.6 |
Technical
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.8 |
| support resistance | 6.2 |
| 52w position | 3.9 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.9 |
| days to cover | 7.7 |
| volatility | 4.0 |
| put call | 10.0 |
| implied vol | 4.6 |
| max pain risk | 7.0 |
| beta | 4.3 |
| news risk | 5.0 |
Catalyst
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 8.8 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:61d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.3<4.5
- ASYMMETRY:0.3<1.5@spot
Warning (0)
none
Reward-to-Risk
0.27
Upside
+1.9%
Downside
6.8%
Sizing output
AVOID
SetupRange Bound — RSI 48 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.73>1.3
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 9.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.3<4.5, ASYMMETRY:0.3<1.5@spot) reinforce the read. Current asymmetry R:R is 0.27 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 9.2, Catalyst at 7.4, and Risk (lower is worse) at 6.2; the weakest are Momentum at 2.3, Insider at 5.1, and Technical at 5.6. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.27 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Beat Streak
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, indicating the management guidance-setting advantage has been competed away.
- P2Strong Revenue Growth Trajectory
Trip ifRevenue growth falls below 10% year over year for 2 consecutive quarters, signaling material deceleration.
- P3High Free Cash Conversion
Trip ifFree cash flow drops below 80% of net income for 2 consecutive quarters.
- P4Technical Downtrend Recovery Signal
Trip ifPrice falls below $23 stop-loss, more than 8% below the current $25.05, and the 200-day moving average slope remains negative.