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What Happened?
Shares of coffee chain Dutch Bros (NYSE:BROS) jumped 33% in the morning session after the company posted strong fourth-quarter results, surpassing analysts' sales, EPS, and EBITDA estimates. Revenue grew 34.9% year-on-year, driven by a 38.2% increase in company-operated shop sales. Growth was further fueled by higher transaction volumes and continued momentum in its Dutch Rewards loyalty program, which now accounts for over 70% of transactions. Margins also improved across the board, supported by pricing adjustments. Looking ahead, Dutch Bros served up a bold sales forecast for 2025, outpacing market expectations. The company also provided adjusted EBITDA in line with estimates, even in the face of headwinds from rising coffee costs. Zooming out, we think this was a very good quarter.
The shares closed the day at $83.53, up 29% from previous close.
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What The Market Is Telling Us
Dutch Bros’s shares are quite volatile and have had 19 moves greater than 5% over the last year. But moves this big are rare even for Dutch Bros and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 40.3% on the news that the company reported a "beat and raise" quarter, which suggests that its recent sales optimization efforts are resonating with customers. Dutch Bros delivered strong third-quarter earnings, which blew past analysts' revenue and EBITDA expectations as same-shop transaction growth improved. This shows profitable growth. The company is engaging customers by introducing new menus, such as seasonal beverages like the Cookie Butter Latte. The rollout of mobile ordering across most locations has also increased transaction frequency.
Lastly, the Dutch Rewards program also contributed to customer retention as the business recorded a high percentage of transactions from members and record-high new memberships. Given the impressive results, management raised full-year revenue and EBITDA guidance. Zooming out, we think this was a standout quarter.
Dutch Bros is up 47.9% since the beginning of the year, and at $83.27 per share, has set a new 52-week high. Investors who bought $1,000 worth of Dutch Bros’s shares at the IPO in September 2021 would now be looking at an investment worth $2,270.
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