Toast, a provider of restaurant software, is IBD Stock Of The Day amid its ongoing bounce off the 21-day exponential moving average. Toast stock has advanced 18% in 2025, outperforming rivals.
On the stock market today, shares rose 2.8% to close at 44.01 after climbing 2.3% on Thursday.
Toast stock holds an entry point of 43.47, Tuesday's intraday high.
Toast stock hit a record 45.56 on May 16, after a one-week surge on earnings out of a base. Shares pulled back over the next few weeks before finding support at the 21-day exponential moving average. IBD research has found that companies that find 21-day support tend to outperform.
Restaurant Software: Crowded Market
Toast's products range from point-of-sale hardware, kitchen displays, payment processing, supplier and invoice management to payroll, delivery management, menu consultation and marketing programs.
Toast's main competitors include Square-parent Block, Fiserv's Clover, Shift4, Lightspeed, TouchBistro and SpotOn.
"If you look at like what has gotten us here, it's like this maniacal focus on restaurants," said Chief Executive Aman Narang at a recent JPMorgan technology conference.
"Two years ago we said we're going to just focus on restaurants and make sure we solve (problems) for restaurants better than anybody else. And that mindset continues in the R&D team, which is like what are the ways in which AI can help restaurants? What are the ways in which we can innovate to continue to increase the value proposition and improve the value proposition."
'Sous Chef' AI Tools
In 2024, Toast announced an artificial intelligence-based tool called Sous Chef. It provides restaurant managers with customer insights to drive sales growth.
"The vision behind Sous Chef was, can we give people a language interface to be able to interact with the back end of Toast," he added.
"I think having a language interface is really powerful. Sous Chef, when we first launched it, we felt that if you think of the average restaurateur, they're not technologists. It's very clear AI is going to stay and it's going to make a huge impact the next decade."
Meanwhile, Toast recently announced that it has won deals with Applebee's and Topgolf.
"We continue to consider Toast a share gaining SaaS (software-as-a-service) platform ," said UBS analyst Timothy Chiodo in a report.
In the March quarter, Toast earnings rose 53% to 9 cents on an adjusted basis. Revenue climbed 24% to $1.344 billion.
In addition, annual recurring revenue rose 31% to $1.713 million, topping estimates of $1.689 million.
Live customer locations increased 25% to 140,000, above estimates of 137,100.
Toast Business Expanding
The company was founded in 2012. Toast's initial public offering in 2021 raised $870 million.
Based in Boston, the company also has U.S. offices in Chicago, Omaha, Reno, San Francisco and Nashville. Toast's software runs on cloud-computing infrastructure at Amazon Web Services, part of Amazon.com.
In 2020, the company rolled out Toast Capital, which provides loans to restaurants.
Further, the company has expanded into Canada, the U.K. and Ireland.
Toast Stock Technical Ratings
Meanwhile, Toast stock holds an IBD Composite Rating of 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Toast stock has an Accumulation/Distribution Rating of B+. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling. The rating, on a scale of A+ to E, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying, a C grade is neutral.
Meanwhile, Toast stock has a 21-day ATR of 4.02%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
IBD suggests stocks with ATRs of up to 8% in the current market
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
