Reviewing Burford Capital (NYSE:BUR) & Toast (NYSE:TOST)

Toast (NYSE:TOST) and Burford Capital (NYSE:BUR) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, profitability, earnings, dividends, analyst recommendations and valuation.

Institutional & Insider Ownership

82.9% of Toast shares are held by institutional investors. 10.0% of Toast shares are held by insiders. Comparatively, 8.9% of Burford Capital shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Toast	$6.15 billion	2.67	$342.00 million	$0.78	40.92
Burford Capital	$413.36 million	2.33	$62.57 million	($7.71)	-0.57

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.

Analyst Ratings

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

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

Toast currently has a consensus price target of $39.12, suggesting a potential upside of 22.56%. Burford Capital has a consensus price target of $9.33, suggesting a potential upside of 112.85%. Given Burford Capital’s higher possible upside, analysts clearly believe Burford Capital is more favorable than Toast.

Profitability

This table compares Toast and Burford Capital’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%
Burford Capital	15.14%	10.24%	4.35%

Risk & Volatility

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

Summary

Toast beats Burford Capital on 12 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 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.