Head to Head Review: Affirm (NASDAQ:AFRM) & Toast (NYSE:TOST)

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

Insider & Institutional Ownership

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

Profitability

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

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

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Toast	0	11	17	0	2.61
Affirm	0	8	24	0	2.75

Toast presently has a consensus target price of $39.11, indicating a potential upside of 19.72%. Affirm has a consensus target price of $97.69, indicating a potential upside of 32.28%. Given Affirm’s stronger consensus rating and higher possible upside, analysts plainly believe Affirm is more favorable than Toast.

Volatility & Risk

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

Earnings and Valuation

This table compares Toast and Affirm”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Toast	$6.15 billion	2.73	$342.00 million	$0.78	41.88
Affirm	$4.26 billion	5.85	$1.93 billion	$5.52	13.38

Affirm has lower revenue, but higher earnings 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.

Summary

Affirm beats Toast on 10 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 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.