Critical Analysis: Domo (NASDAQ:DOMO) & Toast (NYSE:TOST)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Toast	4.68%	15.77%	10.38%
Domo	-21.71%	N/A	-30.34%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Toast	$4.96 billion	2.80	$19.00 million	$0.43	62.65
Domo	$317.04 million	0.60	-$81.93 million	($1.71)	-2.65

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

Insider & Institutional Ownership

82.9% of Toast shares are held by institutional investors. Comparatively, 76.6% of Domo shares are held by institutional investors. 12.1% of Toast shares are held by company insiders. Comparatively, 15.2% of Domo shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Toast and Domo, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Toast	0	8	13	2	2.74
Domo	1	3	4	1	2.56

Toast currently has a consensus price target of $45.55, indicating a potential upside of 69.06%. Domo has a consensus price target of $15.43, indicating a potential upside of 240.59%. Given Domo’s higher probable upside, analysts clearly believe Domo is more favorable than Toast.

Risk and Volatility

Toast has a beta of 1.93, indicating that its stock price is 93% more volatile than the S&P 500. Comparatively, Domo has a beta of 1.64, indicating that its stock price is 64% more volatile than the S&P 500.

Summary

Toast beats Domo on 13 of the 15 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 Domo

Domo, Inc., together with its subsidiaries, operates a cloud-based business intelligence platform in North America, Western Europe, Canada, Australia, and Japan. Its platform digitally connects from the chief executive officer to the frontline employee with the various people, data, and systems in an organization, as well as giving them access to real-time data and insights, and allowing them to manage business via various browsers and visualization engines accessible across laptops, TV screens, monitors, tablets, and smartphones. The company was formerly known as Domo Technologies, Inc. and changed its name to Domo, Inc. in December 2011. Domo, Inc. was incorporated in 2010 and is headquartered in American Fork, Utah.