Toast (TOST) Is stupid undervalued based on its current trajectory/moat IMO

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Summary

Post argues that Toast (TOST) is deeply undervalued given 20% YoY revenue growth, expanding into grocery/gas station POS, a moat from ruggedized hardware, and recent profitability with 27% gross profit growth.
Author dismisses "SaaSpocalypse" and AI disruption fears as overblown, highlighting Toast's sticky hardware ecosystem and brand loyalty among small operators.
Quality assessment: Moderately researched DD – provides specific growth metrics and a clear thesis, but lacks deep financial modeling or competitive analysis beyond the podcast reference.

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Putting some visibility on this, been in this for about a month. Listened to a podcast ([Podcast episode link](https://open.spotify.com/episode/0Kw8wqrb6YmjaNIhEvQXA9?si=a8a52e5f7207463b)) talking about Toast (primarily POS solutions provider for restaurants), and its absolutely stupid how flawed the SaaSpocalypse-related "analysis"  is compared to it's current situation. TOST/Toast is:

\- Currently growing revenue 20% YoY

\- Segueing into other unaddressed business segments needing POS sale services (grocery, gas stations, etc)

\-Differentiated by a dedicated ruggedized hardware system for POS (NOT just an iPad, which makes it far more reliable than competitors)

\-Growing share in TAM relative to competitors (Clover etc.)

\-Gross profit grew 27% last quarter, and only relatively recently turned into a profitable business

But the business is trading at 37x P/E,\~18X forward P/E despite this pretty wild growth trajectory.

Huge amount of this is predicated on the "SaaSpocalypse" and the idea that there is a hypothetical "AI-powered" payments solution that could disrupt the space, but that thesis just doesn't hold up under serious scrutiny. Whereas many other Saas businesses have legitimate margin compression concerns from non-sticky and replaceable enterprise solutions, Toast has a fairly defensible moat stemming from its unique hardware ruggedization (important for harsh kitchen environments) that makes its product far stickier than the other enterprise solutions it gets lumped in with - no to mention the importance of brand familiarity among smaller operators that Toast has built compared to any hypothetical new player in the space.

YMMV, stock is down and of course there are always concerns about catching a falling knife, though I'm intending to ride this one out long term - either the stock P/E stays the same with higher earnings, as they are seemingly opening up the throttle on their profitability, or the price continues to fall with higher net income, at which point it will be even higher value.

Would highly recommend listening to the podcast episode too! Goes into even more detail than this about some of the insane differentiation Toast has right now that are more points in their favor for being undervalued IMO

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u/Primary-Abies9041 Reddit r/ValueInvesting

Revenue growing 20% YoY, gross profit up 27% last quarter, company recently turned profitable; expanding into grocery/gas station verticals; ruggedized hardware creates stickiness vs. iPad-based competitors. The market's SaaSpocalypse/AI-disruption fears are overblown for Toast because its hardware moat and restaurant-specific integration make switching costly. At ~18x forward P/E, the stock is mispriced relative to its growth trajectory. Long-term position – either P/E stays flat with rising earnings or price declines further, creating even greater value. The asymmetry favors the upside. “Catching a falling knife” if the sell-off continues; hypothetical AI or disruptive competitor could still erode moat; macro slowdown hurting restaurant spending; execution risk in new verticals.

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