Article published Aug 24, 2026. Prices below use latest available snapshots.
TOST Price Structure
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Thesis: Operating income nearly doubled over three quarters on roughly flat revenue while the stock de-rated 15% on the year — the operating-leverage turn is real, but the entry has already run 65% off the May low
The Story Right Now
Toast sells point-of-sale terminals and payment processing to restaurants. For most of the past year the market treated it as a growth story going ex-growth: the stock is down 15.49% over twelve months, trails the market by 35.6 points of alpha, and bottomed at $22.26 on 2026-05-13 after sliding from a $45.64 high set the previous August. That is a full year of being wrong-footed.
What changed is not the top line. Revenue printed $1.63B in three consecutive quarters — 2025 Q3, 2025 Q4 and 2026 Q1 — before stepping to $1.91B in 2026 Q2. What changed is what survives the trip down the income statement. Quarterly operating income went $84M → $110M → $152M across those same periods, and diluted EPS went $0.16 → $0.20 → $0.26. Gross profit moved $432M → $447M → $516M. That is operating leverage arriving on a business that had already stopped needing to buy its growth.
It is also not a promise about future cash. FY2025 threw off $661M of operating cash flow against $53M of capex, and the balance sheet carries $1.01B of cash plus $698M of short-term investments as of 2026-06-30. There is no runway question here and no story about a path to profitability — the profitability is in the filings.
The tape has noticed. TOST closed 2026-08-24 at $36.71, up 58.51% over three months and 26.41% over thirty days, through a golden cross and 21.5% above its 200-day. That is the problem with it as an entry today rather than a problem with the business. RSI is 70.3, price sits 6.7% above the 20-day and 20.1% above the 50-day, and the move has come on below-average participation — relative volume 0.74. The setup has done bottom, then pop. It has not yet done the flag.
Extended analysis
Setup
- Entry zone: $33.00-$34.90
- Stop: $29.50
- Target: $45.64
- Conviction: medium
The zone is where the 20-day ($34.42) and the top of the volume value area ($34.92) converge — the shelf a normal flag would retest. The stop sits just under the support shelf at $29.57, which is also where the 50-day ($30.58) and 200-day ($30.22) stack; a settled close beneath all three breaks the structure that makes this a trend rather than a bounce. The target is the prior high, not a valuation-derived number — a trend-hold trails from there rather than capping.
Bull case
- Operating leverage is visible and still widening. $84M → $110M → $152M of quarterly operating income is not a one-quarter artifact; the gross-profit line widened alongside it, which is the tell that it is mix and scale rather than a cost cut.
- It is cash-generative now. $661M of FY2025 operating cash flow on $53M of capex is a genuinely asset-light profile for a company that ships hardware.
- The long trend never broke. Down 15.49% on the year, but up 55.03% over two years and 74.98% over three. The past twelve months read as a de-rate inside a longer uptrend, not a topping pattern.
- The tape has confirmed. Golden cross, strong-up trend, 21.5% above the 200-day, and the desk's own composite scores a 100% earnings beat rate.
Bear case
- Revenue was flat for three straight quarters. $1.63B, $1.63B, $1.63B. Margin expansion on a flat top line is finite in a way that growth is not; if Q2's $1.91B does not repeat, the leverage story converts into a cost story.
- Inventories nearly doubled while revenue barely moved — $114M at 2025-12-31, $136M at 2026-03-31, $217M at 2026-06-30. That is either a deliberate hardware build ahead of demand or terminals that are not moving, and the two look identical on the balance sheet until the next print.
- The entry has already run. Up 65% off the May low, RSI 70.3, 20.1% above the 50-day, and still 19.57% below the prior high — so the re-rate has to clear a full year of overhead supply from here.
- A year of underperformance is not undone by one quarter. Alpha of −35.6 over twelve months means the market has been actively de-rating this, and one good quarter is a data point, not a regime.
- Participation is thin. Relative volume 0.74 on a 26% thirty-day move means this has re-rated on absence of sellers more than on arrival of buyers.
Catalysts
- The next quarterly print is the whole argument: whether revenue breaks the $1.63B plateau, and whether the inventory build converts into shipped units. No confirmed date is carried yet — the name entered coverage on 2026-08-24, after this session's calendar walk, so its next report date lands on the following refresh.
- Restaurant end-market data. This is a consumer-cyclical customer base; restaurant closures show up in seat count before they show up in revenue.
Risks
- Consumer-cyclical end market with limited pricing power at the customer level.
- Payments take-rate compression is the structural risk in every POS-plus- processing model, and it compounds quietly rather than announcing itself.
- Short interest is unverified. The receipt for this name is missing or stale, so crowding cannot be assessed either way — this dive makes no claim about positioning.
Financials
Two-source: every 2026 Q2 line below reconciles exactly between the Massive provider cache and SEC XBRL — revenue $1.91B, operating income $152M, net income $154M, diluted EPS $0.26.
| Period | Revenue | Gross profit | Operating income | Net income | Diluted EPS |
|---|---|---|---|---|---|
| 2025 Q3 | $1.63B | $432M | $84M | $0.10B | $0.16 |
| 2025 Q4 | $1.63B | $0.42B | $0.09B | $0.10B | $0.17 |
| 2026 Q1 | $1.63B | $447M | $110M | $126M | $0.20 |
| 2026 Q2 | $1.91B | $516M | $152M | $154M | $0.26 |
| FY2025 | $6.15B | $1.59B | $292M | $342M | $0.56 |
Balance sheet and cash, 2026-06-30: cash $1.01B, short-term investments $698M, inventories $217M, receivables $142M. First-half 2026 operating cash flow $276M against $31M of capex.
One figure did not pass: the 2025 Q4 basic share count came back as 2.0M against an adjacent four-quarter median of 582.5M and was held as suspect rather than published. Per-share figures above are the diluted EPS reported in the filings, not derived from that share count.
Cross-references
- Entered coverage on the consumer watchlist 2026-08-24, alongside the payments names (PYPL, XYZ) and the restaurant operators (SBUX, CMG, DPZ) that are both its comp set and its customer base.
- Sits in the same "strong short-window trend on a negative trailing year" bucket the desk flagged across the tape on 2026-08-22 — the pattern where the 30-day and the 1-year disagree and the 1-year usually deserves the weight.
Sources
- SEC 10-Q, quarter ended 2026-06-30, filed 2026-08-05 — https://www.sec.gov/Archives/edgar/data/1650164/000165016426000164/tost-20260630.htm
- SEC 10-K, FY2025, filed 2026-02-18 — https://www.sec.gov/Archives/edgar/data/1650164/000165016426000057/tost-20251231.htm
- SEC 8-K, filed 2026-08-04 — https://www.sec.gov/Archives/edgar/data/1650164/000165016426000162/tost-20260804.htm
- SEC XBRL company facts, CIK 0001650164 — key-financials
- Massive/Polygon statements — massive{income-statements,balance-sheets,cash-flow-statements}.json`
- Price truth, 2026-08-24 settled close — consumer