Raise your glasses to Toast as shares of the software maker now sit in a buy zone after an earnings breakout, while the company is expected to turn a profit in the current quarter. Toast stock makes the list for Monday's IBD 50 Stocks To Watch
The food service software specialist provides technology and solutions to more than 106,000 restaurants, ranging from bars to casual and fine dining sites, hotels, bakeries and food trucks. Its services assist point-of-sale transactions, payment processing, mobile and kiosk ordering, kitchen display systems and gift-card management.
The stock ranks 16th out of 38 stocks in the finance-credit card/payment processing group. The industry group has a high No. 7 rank out of 197 IBD groups.
Toast stock is in a 5% buy zone of a cup-with-handle base with a 22.66 buy point, according to MarketSurge pattern recognition. The buy zone reaches to 23.79.
The stock gapped up 16.8% in heavy volume on Feb. 16, following the company's smaller-than-expected fourth-quarter loss and higher sales the day prior. That started the formation of the handle of the cup. Shares finished right at the buy point when the market day concluded on Feb. 28 and have been rising since.
Toast stock trades nearly 25% above its 50-day moving average. Its relative strength line is trending up after the pullback following the recent quarterly results.
Toast Stock: Profits On The Way
Toast's fourth-quarter loss improved to 7 cents a share on 35% sales growth. Quarterly losses have trended smaller, while its sales growth rate is also decelerating, but still robust. Toast added more than 6,500 net new locations in the fourth quarter.
Toast's board recently approved a restructuring plan to improve operating expense efficiency, announced in the earnings release. Scheduled to begin Feb. 13, the plan includes a cut of around 550 jobs and other reorganization tactics. The board also authorized a share repurchase program of up to $250 million of its common stock, in the quarterly release.
FactSet's current-quarter earnings estimates, now shown on the bottom left panel of the weekly MarketSurge chart, show a five-cent profit forecast, after continuous losing quarters. Quarterly earnings estimates are expected to continue to grow, from nine cents to 12-cents per-share in the following three quarters.
Quarterly sales growth is expected to be in the 24% to 26% range for the next four quarters, also shown on the lower left.
Analysts estimate full-year 2024 earnings of 38 cents a share, then they see them growing 72% to 66 cents in 2025.
Toast stock holds a respectable 85 IBD Composite Rating. Meanwhile, its low 56 Earnings Per Share Rating is due to its unprofitability going back to 2019.
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