Stock Market

It’s Time to Order Up a Piping-Hot Serving of Dutch Bros

In the mood for a fresh cup of joe and some stock-market news? Oregon-based coffee restaurant chain Dutch Bros (NYSE:BROS) is becoming increasingly popular, yet BROS stock still isn’t on the radar for many of today’s investors.

A Dutch Bros coffee shop representing BROS Stock.

Source: Alexander Oganezov / Shutterstock.com

That’s not a bad thing, as it could represent an early-stage opportunity in a fast-growing company. Dutch Bros had humble beginnings, but is now threatening/promising to become a fully national restaurant chain.

Granted, BROS stock is still a somewhat speculative investment. The company just had its initial public offering (IPO) a few months ago, and issued its first quarterly earnings report as a publicly traded company.

I wouldn’t call it a make-or-break moment, but it was pretty significant. Not every data point was positive, admittedly. However, there was enough positive news to give the investors a caffeine-like jolt, and perhaps even prompt them to buy some more shares of the stock.

A Closer Look at BROS Stock

Just to give you a recap, Dutch Bros first provided a price range of $18 to $20 for its publicly traded shares.

After that, however, the company announced that it would increase its IPO price to $23 per share in September.

It was an auspicious start, to say the least. Dutch Bros finally went public on Sept. 14 at the previously mentioned price of $23, and amazingly, the stock rallied to $60 by Sept. 21.

The bullish momentum then continued for a while longer, with BROS stock peaking at $81.40 on the first day of November.

Three weeks later, the share price came down to $55, and it’s still too early to identify a price range for the stock.

Probably the best strategy, then, would be to start accumulating BROS stock for a long-term position. If the price declines, you can always pick up a few more shares, but please don’t over-leverage yourself.

An Inspiring Growth Story

You might be wondering how Dutch Bros fared in its very first post-IPO earnings report. And, we’ll definitely get to that momentarily.

First, though, I feel it’s important to understand what makes this company special. After all, a business must have something unique about it, if it’s going to compete with the likes of Starbucks (NASDAQ:SBUX).

In a recent conference call, Dutch Bros President and CEO Joth Ricci compellingly recounted his company’s growth story.

He conveyed the humble beginnings: “In 1992, Dane and Travis Boersma started Dutch Bros with a double-head espresso machine and a pushcart in downtown Grants Pass, Oregon.”

In other words, even though the IPO just took place recently, Dutch Bros has been serving coffee for nearly three decades.

Fast-forward to the 2020’s, and it’s evident that Ricci wants the company to have a nationwide presence.

This objective is definitely achievable. Since 2015, Dutch Bros’ shop count has nearly doubled to over 500 drive-through shops in 11 states. In 2021, Dutch Bros entered two new states, Oklahoma and Texas.

Mixed Results

In 10 to 15 years, Ricci wants the company’s U.S. location count to reach 4,000.

This may be possible if Dutch Bros can bring in enough revenues and earnings.

So, let’s order up a serving of third-quarter 2021 fiscal stats.

The company’s revenues increased by nearly 50% year-over-year, to $129.8 million. Evidently, Dutch Bros has been selling a whole lot of coffee.

On the other hand, the company posted a quarterly earnings loss of $117.1 million.

That’s a disappointment compared to the earnings of $6.7 million (gained, not lost) from the year-ago quarter.

Hence, Dutch Bros should consider focusing on turning the company’s impressive revenue growth into better bottom-line results.

The Bottom Line

What’s special about Dutch Bros, ultimately, is the company’s inspiring story as it rose up from humble beginnings.

It’s still too early to determine whether BROS stock is cheap or expensive. Only time will tell what the stock is really worth.

For now, though, if you’re on board with Dutch Bros’ vision of nationwide expansion, feel free to order up a few shares for the long term.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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