Dj Pres Fredette Gifts 110604 Of Toast Inc >Tost

Toast (TOST) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.

Over the past month, shares of this restaurant software provider have returned +37.5%, compared to the Zacks S&P 500 composite's +3.1% change. During this period, the Zacks Internet - Software industry, which Toast falls in, has gained 4%. The key question now is: What could be the stock's future direction?

While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.

Earnings Estimate Revisions

Here at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For the current quarter, Toast is expected to post earnings of $0.02 per share, indicating a change of +128.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +85.7% over the last 30 days.

The consensus earnings estimate of -$0.07 for the current fiscal year indicates a year-over-year change of +85.1%. This estimate has changed +33.2% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $0.33 indicates a change of +571.5% from what Toast is expected to report a year ago. Over the past month, the estimate has changed +17.9%.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #1 (Strong Buy) for Toast.

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Projected Revenue Growth

While earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

For Toast, the consensus sales estimate for the current quarter of $1.31 billion indicates a year-over-year change of +26.5%. For the current and next fiscal years, $4.93 billion and $6.13 billion estimates indicate +27.6% and +24.2% changes, respectively.

Last Reported Results and Surprise History

Toast reported revenues of $1.31 billion in the last reported quarter, representing a year-over-year change of +26.5%. EPS of $0.07 for the same period compares with -$0.09 a year ago.

Compared to the Zacks Consensus Estimate of $1.29 billion, the reported revenues represent a surprise of +1.4%. The EPS surprise was +600%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.

Valuation

No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Toast is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Conclusion

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Toast. However, its Zacks Rank #1 does suggest that it may outperform the broader market in the near term.

Zacks Investment Research

Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at Toast (TOST), which currently has a Momentum Style Score of A. We also discuss some of the main drivers of the Momentum Style Score, like price change and earnings estimate revisions.

It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Toast currently has a Zacks Rank of #1 (Strong Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here

Set to Beat the Market?

Let's discuss some of the components of the Momentum Style Score for TOST that show why this restaurant software provider shows promise as a solid momentum pick.

Looking at a stock's short-term price activity is a great way to gauge if it has momentum, since this can reflect both the current interest in a stock and if buyers or sellers have the upper hand at the moment. It's also helpful to compare a security to its industry; this can show investors the best companies in a particular area.

For TOST, shares are up 20.98% over the past week while the Zacks Internet - Software industry is up 5.05% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 37.24% compares favorably with the industry's 5.08% performance as well.

While any stock can see its price increase, it takes a real winner to consistently beat the market. That is why looking at longer term price metrics -- such as performance over the past three months or year -- can be useful as well. Over the past quarter, shares of Toast have risen 64.09%, and are up 168.05% in the last year. On the other hand, the S&P 500 has only moved 12.29% and 37.16%, respectively.

Investors should also pay attention to TOST's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. TOST is currently averaging 7,887,547 shares for the last 20 days.

Earnings Outlook

The Zacks Momentum Style Score also takes into account trends in estimate revisions, in addition to price changes. Please note that estimate revision trends remain at the core of Zacks Rank as well. A nice path here can help show promise, and we have recently been seeing that with TOST.

Over the past two months, 2 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost TOST's consensus estimate, increasing from -$0.10 to -$0.07 in the past 60 days. Looking at the next fiscal year, 2 estimates have moved upwards while there have been no downward revisions in the same time period.

Bottom Line

Taking into account all of these elements, it should come as no surprise that TOST is a #1 (Strong Buy) stock with a Momentum Score of A. If you've been searching for a fresh pick that's set to rise in the near-term, make sure to keep Toast on your short list.

Zacks Investment Research

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, November 13:

Toast, Inc. TOST: This cloud-based digital technology platform provider has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 20% over the last 60 days.

Toast, Inc. Price and Consensus

Toast, Inc. price-consensus-chart | Toast, Inc. Quote

Toast's shares gained 59.1% over the last three months compared with the S&P 500’s advanced of 9.7%. The company possesses a Momentum Score of A.

Toast, Inc. Price

Toast, Inc. price | Toast, Inc. Quote

Fortinet, Inc. FTNT: This cybersecurity and convergence of networking and security solutions provider has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 7% over the last 60 days.

Fortinet, Inc. Price and Consensus

Fortinet, Inc. price-consensus-chart | Fortinet, Inc. Quote

Fortinet's shares gained 36.2% over the last three months compared with the S&P 500’s advanced of 9.7%. The company possesses a Momentum Score of A.

Fortinet, Inc. Price

Fortinet, Inc. price | Fortinet, Inc. Quote

Payoneer Global Inc. PAYO: This financial technology company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 28% over the last 60 days.

Payoneer Global Inc. Price and Consensus

Payoneer Global Inc. price-consensus-chart | Payoneer Global Inc. Quote

Payoneer Global's shares gained 54.3% over the last three months compared with the S&P 500’s advanced of 9.7%. The company possesses a Momentum Score of A.

Payoneer Global Inc. Price

Payoneer Global Inc. price | Payoneer Global Inc. Quote

See the full list of top ranked stocks here

Learn more about the Momentum score and how it is calculated here.

Zacks Investment Research

Here are five stocks added to the Zacks Rank #1 (Strong Buy) List today:

UBS Group AG UBS: This financial holding company has seen the Zacks Consensus Estimate for its current year earnings increasing 18.9% over the last 60 days.

UBS Group AG Price and Consensus

UBS Group AG price-consensus-chart | UBS Group AG Quote

Kingstone Companies, Inc. KINS: This property and casualty insurance company has seen the Zacks Consensus Estimate for its current year earnings increasing 36% over the last 60 days.

Kingstone Companies, Inc Price and Consensus

Kingstone Companies, Inc price-consensus-chart | Kingstone Companies, Inc Quote

HUYA Inc. HUYA: This live-streaming company has seen the Zacks Consensus Estimate for its current year earnings increasing 5.3% over the last 60 days.

HUYA Inc. Sponsored ADR Price and Consensus

HUYA Inc. Sponsored ADR price-consensus-chart | HUYA Inc. Sponsored ADR Quote

Payoneer Global Inc.PAYO: This financial technology company has seen the Zacks Consensus Estimate for its current year earnings increasing 28% over the last 60 days.

Payoneer Global Inc. Price and Consensus

Payoneer Global Inc. price-consensus-chart | Payoneer Global Inc. Quote

Toast, Inc. TOST: This cloud-based digital technology platform provider has seen the Zacks Consensus Estimate for its current year earnings increasing 20% over the last 60 days.

Toast, Inc. Price and Consensus

Toast, Inc. price-consensus-chart | Toast, Inc. Quote

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research