The average target price of BROS is 76 and suggests 13% upside potential. Usually, this means a HOLD recommendation among investment firms. This neutral recommendation suggests no significant price movement, up or down, in the next 12 months. The most optimistic analyst has a target price of 83.0. This translates into 23% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 63.0. This is equivalent to 7% downside potential in the worst case. 

Dutch Bros Inc., together with its subsidiaries, operates and franchises drive-thru shops in the United States. The company operates through Company-Operated Shops and Franchising and Other segments. It serves through company-operated shops and online channels under Dutch Bros; Dutch Bros Coffee; Dutch Bros Rebel; Dutch Bros; and Blue Rebel brands. Dutch Bros Inc. was founded in 1992 and is headquartered in Grants Pass, Oregon.

Dutch Bros Inc.

Consumer Cyclical

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

BROS reported revenue of USD 1 361mn in the last 12 months, up 6% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 13% from FY24 to USD 0.39. Market expects EPS to reach USD 0.45 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 48ppts over past six months and grown 20ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 14.9% in the last 12 months, up from 12.6% in FY23. 

Historically, BROS has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 3.2%, a growth from 0.2% in FY23. 

Dutch Bros Inc. reported a return on equity (RoE) of 9.0% in the last 12 months, up from 0.7% in FY23. The market consensus projects an RoE of 0.8% in FY24, again behind its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 2.1%, below the peers. The consensus estimate for FY24 for RoCE is 4.3%, again behind the peers. 

Another important profitability metric, return on assets (RoA), amounted to 1.9% in the last 12 months, an increase from 0.1% in FY23. The market analysts predict that RoA will be 0.2% in FY24, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.1 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

BROS boasts very high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually quite stable and remains mildly favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to bleak profitability, negligible return on capital, poor working capital management, weak debt servicing capacity, and an unfavourable capital structure. We note resilient historical revenue growth, among the positive credit factors. 

In highly turbulent market conditions, BROS is highly volatile. In other words, the stock will fall substantially more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be significant. 

In normal market circumstances, BROS is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

Dutch Bros Inc.

$ 67.46

3

Dutch Bros Inc.

$ 67.46

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 67.46

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