Toast (TOST) Expands Adyen Partnership, Is The Stock Fully Valued?

What the Adyen partnership expansion means for Toast stock

Toast (TOST) is back in focus after Adyen announced an expanded U.S. partnership. The deal supports a platform that handled more than $215b in gross payment volume across about 180,000 locations in the past year.

See our latest analysis for Toast.

The Adyen news comes on top of strong recent momentum, with Toast’s 30 day share price return of 26.41% and 90 day share price return of 57.42%, even though the 1 year total shareholder return declined 15.49%.

If you are looking beyond payments focused platforms like Toast, this is a useful moment to scan the market for 55 AI infrastructure stocks

Toast now appears to be a stronger platform following the Adyen expansion and the sharp share price move. The key question for investors is whether that improved narrative is already fully reflected in today’s valuation.

Most Popular Narrative: 6% Overvalued

Toast closed at $36.71 compared with a narrative fair value of $34.73, so the widely followed view prices in a premium to its modeled worth.

The rapid adoption of integrated digital payment and ordering solutions including mobile and contactless experiences continues to expand Toast's addressable market, positioning the company to capture increased transaction volume and higher recurring fintech and software revenues as restaurants upgrade from legacy systems.

Read the complete narrative.

Want to see what that growth path looks like in detail? The narrative leans on rising earnings power, richer margins, and a higher future profit multiple.

Result: Fair Value of $34.73 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Toast still faces pressure from rising sales and marketing costs, as well as intense competition from other payment and restaurant platforms, which could weigh on margins and growth expectations.

Find out about the key risks to this Toast narrative.

Another View on Toast’s valuation

The narrative fair value suggests Toast is overvalued at $36.71 versus $34.73. Our DCF model points in the other direction. It values Toast at $40.14 per share, which is higher than the current price. Which set of assumptions do you find more realistic for Toast’s future cash flows?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Toast for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 48 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

The mixed signals around Toast’s valuation and recent share price move make this a good moment to review the numbers yourself and act promptly. To see what is driving optimism around the stock, take a closer look at 3 key rewards

Looking for more investment ideas beyond Toast?

Do not stop with Toast. Use this moment to refresh your watchlist with fresh opportunities that match your risk profile and income goals.

• Hunt for value by scanning companies that screen as 48 high quality undervalued stocks and see which ones deserve a closer look.
• Strengthen your income stream by reviewing stocks flagged as 12 dividend fortresses and assess whether their payouts fit your plan.
• Protect your downside by focusing on companies highlighted in the 75 resilient stocks with low risk scores and compare how they stack up against what you already own.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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