Critical Analysis: Toast (NYSE:TOST) vs. Acacia Research (NASDAQ:ACTG)

Acacia Research (NASDAQ:ACTG) 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.

Volatility & Risk

Acacia Research has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500. Comparatively, Toast has a beta of 1.74, indicating that its stock price is 74% more volatile than the S&P 500.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Acacia Research	1	0	1	0	2.00
Toast	0	11	17	0	2.61

Acacia Research presently has a consensus target price of $6.00, indicating a potential upside of 41.84%. Toast has a consensus target price of $39.15, indicating a potential upside of 21.64%. Given Acacia Research’s higher possible upside, research analysts plainly believe Acacia Research is more favorable than Toast.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Acacia Research	$278.37 million	1.48	$21.68 million	($0.15)	-28.20
Toast	$6.15 billion	2.69	$342.00 million	$0.78	41.26

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Acacia Research	-5.39%	0.44%	0.33%
Toast	7.14%	23.90%	15.77%

Insider & Institutional Ownership

86.7% of Acacia Research shares are held by institutional investors. Comparatively, 82.9% of Toast shares are held by institutional investors. 1.7% of Acacia Research 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.

Summary

Toast beats Acacia Research on 12 of the 14 factors compared between the two stocks.

About Acacia Research

Acacia is a publicly traded (Nasdaq: ACTG) company that is focused on acquiring and operating businesses across the industrial, energy and technology sectors where it believes it can leverage its expertise, significant capital base, and deep industry relationships to drive value. Acacia evaluates opportunities based on the attractiveness of the underlying cash flows, without regard to a specific investment horizon. Acacia operates its businesses based on three key principles of people, process, and performance and has built a management team with demonstrated expertise in research, transactions and execution, and operations and management.

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.