Toast (TOST) is back in focus after announcing a partnership with ICC UK, where it will offer its restaurant technology platform to hospitality brands looking to expand between the UK and US.

Despite the ICC UK partnership putting Toast back in the headlines, the stock has had a mixed run. The 1-day share price return of 5.06% contrasts with a year-to-date share price return down 27.98% and a 1-year total shareholder return down 41.83%, while the 3-year total shareholder return remains positive at 16.83%. This suggests earlier gains are being reassessed.

If Toast’s international push has you thinking about where technology and automation might head next, it could be worth widening your search with 35 robotics and automation stocks

With Toast trading at US$24.50 and the stock sitting at a discount to both analyst price targets and some intrinsic value estimates, investors may question whether there is mispricing in the shares or whether the market is already factoring in expectations for future growth.

Most Popular Narrative: 32.6% Undervalued

At a last close of $24.50 versus a narrative fair value of $36.36, Toast is framed as materially undervalued, with that gap hinging on how its restaurant platform scales over time.

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. Long-term challenges with labor shortages and wage pressures in hospitality drive restaurants to seek automation and operational efficiency, increasing demand for Toast's AI-driven tools (such as ToastIQ and Sous Chef) and productivity-enhancing hardware (Toast Go 3), which should support sustained revenue growth and improve net margins.

Want to see what kind of revenue trajectory and margin profile would need to materialize for that valuation gap to close? The most followed narrative leans on a specific blend of top line expansion, rising profitability, and a future earnings multiple that sits well above the broader sector. Curious which of those levers carries the most weight in the $36.36 figure and how sensitive the outcome is to small forecast changes? The full narrative walks through those assumptions step by step.

Result: Fair Value of $36.36 (UNDERVALUED)

However, this hinges on Toast converting its AI and software edge into sustained adoption, while managing hardware costs and intense competition that could pressure margins and returns.

Another Angle: Earnings Multiple Paints A Tougher Picture

While the narrative fair value of $36.36 points to upside, Toast’s current P/E of 34.5x sits above both the peer average of 29.5x and a fair ratio of 20.9x. That gap suggests investors are already paying a premium, so is the perceived undervaluation really as clear cut?

Next Steps

The mix of optimism and caution in this article is a starting point, not a verdict. Move quickly to check the data and form your own view by weighing up 4 key rewards

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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.