Critical Review: Tucows (NASDAQ:TCX) & Toast (NYSE:TOST)

Toast (NYSE:TOST) and Tucows (NASDAQ:TCX) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, dividends, risk and institutional ownership.

Risk & Volatility

Toast has a beta of 1.76, indicating that its share price is 76% more volatile than the S&P 500. Comparatively, Tucows has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500.

Valuation & Earnings

This table compares Toast and Tucows”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Toast	$3.87 billion	3.43	-$246.00 million	($0.50)	-57.54
Tucows	$350.81 million	0.62	-$96.20 million	($9.51)	-2.08

Tucows has lower revenue, but higher earnings than Toast. Toast is trading at a lower price-to-earnings ratio than Tucows, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

82.9% of Toast shares are owned by institutional investors. Comparatively, 73.6% of Tucows shares are owned by institutional investors. 13.3% of Toast shares are owned by insiders. Comparatively, 11.6% of Tucows shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Toast and Tucows’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Toast	-3.10%	-11.27%	-6.80%
Tucows	-26.01%	-490.14%	-11.58%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Toast and Tucows, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Toast	1	8	9	1	2.53
Tucows	0	0	0	0	N/A

Toast currently has a consensus price target of $28.33, suggesting a potential downside of 1.52%. Given Toast’s higher probable upside, research analysts plainly believe Toast is more favorable than Tucows.

Summary

Toast beats Tucows on 12 of the 14 factors compared between the two stocks.

About Toast

Toast, Inc. operates a cloud-based digital technology platform for the restaurant industry in the United States, Ireland, and India. The company offers software products for restaurant operations and point of sale, such as Toast POS, Toast now, multi-location management, kitchen display system, Toast mobile order and pay, Toast catering and events, Toast invoicing, Toast tables, and restaurant retail; and hardware products, including Toast flex, Toast flex for guest, Toast go 2, Toast tap, kiosks, and Delphi by Toast. It provides toast online ordering and toast takeout, first-party delivery toast delivery services, and third-party delivery integrations and orders hub; and loyalty, email marketing, and toast gift cards. In addition, the company offers payroll and team management, Sling by Toast, Toast pay card and payout, and tips manager, as well as partner-enabled products comprising insurance and benefits; supply chain and accounting products, such as xtraCHEF by toast; and financial technology solutions consisting of payment processing, toast capital, and purchase plans. Further, it offers reporting and analytics, Toast shop, and Toast partner connect and application programming interfaces. The company was formerly known as Opti Systems, Inc. and changed its name to Toast, Inc. in May 2012. Toast, Inc. was incorporated in 2011 and is headquartered in Boston, Massachusetts.

About Tucows

Tucows Inc. provides network access, domain name registration, email, mobile telephony, and other Internet services in North America and Europe. It operates in three segments: Ting, Wavelo and Tucows Domains. The Ting segment provides fiber and fixed wireless internet services. The Wavelo segment offers individual developer tools, subscription, billing management, network orchestration, and provisioning services. This segment also provides billing solutions under Platypus brand. The Tucows Domains segment offers name registration, as well as value added services under OpenSRS, eNom, Ascio, EPAG, and Hover brands. The company was formerly known as Infonautics, Inc. and changed its name to Tucows Inc. in August 2001. Tucows Inc. was incorporated in 1992 and is headquartered in Toronto, Canada.