Toast (NYSE:TOST) vs. Burford Capital (NYSE:BUR) Critical Analysis

Burford Capital (NYSE:BUR) and Toast (NYSE:TOST) are both 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. 8.9% of Burford Capital shares are held by insiders. Comparatively, 10.0% of Toast 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 Burford Capital and Toast’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Burford Capital	15.14%	10.24%	4.35%
Toast	7.14%	23.90%	15.77%

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Burford Capital	2	2	2	0	2.00
Toast	0	11	16	0	2.59

Burford Capital presently has a consensus target price of $9.33, indicating a potential upside of 115.05%. Toast has a consensus target price of $39.12, indicating a potential upside of 15.25%. Given Burford Capital’s higher possible upside, research analysts plainly believe Burford Capital is more favorable than Toast.

Volatility & Risk

Burford Capital has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500. Comparatively, Toast has a beta of 1.72, indicating that its stock price is 72% more volatile than the S&P 500.

Earnings and Valuation

This table compares Burford Capital and Toast”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Burford Capital	$413.36 million	2.31	$62.57 million	($7.71)	-0.56
Toast	$6.15 billion	2.84	$342.00 million	$0.78	43.51

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

Summary

Toast beats Burford Capital on 12 of the 14 factors compared between the two stocks.

About Burford Capital

Burford Capital Limited provides legal finance products and services worldwide. The company operates through two segments, Capital Provision, and Asset Management and Other Provision. The Capital Provision segment provides capital to the legal industry or in connection with legal matters directly and through investment in private funds; legal risk management services; lower risk legal finance business focusing on pre-settlement litigation matters with lower risk and lower expected returns; post-settlement finance; and complex strategies in which it acts as a principal and acquires assets that are mispriced. The Asset Management and Other Services segment provides services to the legal industry, including litigation insurance. Burford Capital Limited was incorporated in 2009 and is based in Saint Peter Port, Guernsey.

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.