Critical Review: Toast (NYSE:TOST) vs. Gravity (NASDAQ:GRVY)

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

Institutional and Insider Ownership

9.9% of Gravity shares are held by institutional investors. Comparatively, 82.9% of Toast shares are held by institutional investors. 13.3% of Toast shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Gravity and Toast, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gravity	0	0	0	0	N/A
Toast	1	10	9	0	2.40

Toast has a consensus price target of $26.05, indicating a potential upside of 6.85%. Given Toast’s higher possible upside, analysts plainly believe Toast is more favorable than Gravity.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Gravity	16.96%	46.65%	36.71%
Toast	-6.02%	-21.45%	-12.99%

Earnings & Valuation

This table compares Gravity and Toast’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gravity	$555.74 million	1.00	$105.61 million	$13.23	6.07
Toast	$3.87 billion	2.86	-$246.00 million	($0.50)	-48.76

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

Risk and Volatility

Gravity has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500. Comparatively, Toast has a beta of 1.76, meaning that its stock price is 76% more volatile than the S&P 500.

Summary

Toast beats Gravity on 7 of the 13 factors compared between the two stocks.

About Gravity

Gravity Co., Ltd. develops and publishes online and mobile games in South Korea, Taiwan, Thailand, and the United States. The company offers a massively multiplayer online role-playing game, including Ragnarok Online, Dragonica, Ragnarok Online II, and Ragnarok Prequel II. Its mobile games portfolio includes Ragnarok M: Eternal Love; Ragnarok Origin; Ragnarok X: Next Generation; the Labyrinth of Ragnarok; Ragnarok Poring Merge; Tera Classic; Ragnarok: The Lost Memories; Sadako M; NBA: Rise To Stardom; Milkmaid Of The Milky Way; and Paladog Tactics. The company also provides console games, such as Ragnarok DS for Nintendo DS; Ragnarok: The Princess of Light and Darkness for PlayStation Portable; Ragnarok Odyssey for PlayStation Vita; Double Dragon II for Xbox 360; Ragnarok Odyssey Ace for PlayStation Vita and PlayStation 3; and GRANDIA HD Collection for Nintendo Switch. In addition, it offers games for IPTV, including Haunted House and Pororo: The Little Penguin; and markets dolls, stationery, food, and other character-based merchandises, as well as game manuals, monthly magazines, and other publications. Further, the company provides system development and maintenance services, as well as system integration services to third parties. The company was incorporated in 2000 and is headquartered in Seoul, South Korea. Gravity Co., Ltd. is a subsidiary of GungHo Online Entertainment, Inc.

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.