Toast (NYSE:TOST) & Affirm (NASDAQ:AFRM) Critical Comparison

Affirm (NASDAQ:AFRM) and Toast (NYSE:TOST) are both large-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.

Earnings & Valuation

This table compares Affirm and Toast”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Affirm	$4.26 billion	5.58	$1.93 billion	$5.52	12.77
Toast	$6.15 billion	2.49	$342.00 million	$0.78	38.24

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Affirm	45.29%	47.91%	14.46%
Toast	7.14%	23.90%	15.77%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Affirm and Toast, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Affirm	0	8	24	0	2.75
Toast	0	11	16	0	2.59

Affirm presently has a consensus target price of $97.69, suggesting a potential upside of 38.55%. Toast has a consensus target price of $39.12, suggesting a potential upside of 31.15%. Given Affirm’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Affirm is more favorable than Toast.

Insider and Institutional Ownership

69.3% of Affirm shares are held by institutional investors. Comparatively, 82.9% of Toast shares are held by institutional investors. 11.0% of Affirm shares are held by insiders. Comparatively, 10.0% of Toast shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Affirm has a beta of 3.82, suggesting that its stock price is 282% more volatile than the S&P 500. Comparatively, Toast has a beta of 1.74, suggesting that its stock price is 74% more volatile than the S&P 500.

Summary

Affirm beats Toast on 10 of the 14 factors compared between the two stocks.

About Affirm

Affirm Holdings, Inc. operates a platform for digital and mobile-first commerce in the United States, Canada, and internationally. The company's platform includes point-of-sale payment solution for consumers, merchant commerce solutions, and a consumer-focused app. Its commerce platform, agreements with originating banks, and capital markets partners enables consumers to pay for a purchase over time with terms ranging up to 60 months. The company has active merchants covering small businesses, large enterprises, direct-to-consumer brands, brick-and-mortar stores, and companies with an omni-channel presence. Its merchants represent a range of industries, including sporting goods and outdoors, furniture and homewares, travel and ticketing, apparel, accessories, consumer electronics, and jewelry. Affirm Holdings, Inc. was founded in 2012 and is headquartered in San Francisco, California.

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.