Regarding coffee companies, most of the focus centers on Starbucks. This makes sense, as the stock has grown from a regional name to an international sensation in its 33 years of trading on the stock market.
Now, the market may have its best coffee stock since Starbucks with the emergence of Dutch Bros (BROS -2.31%). Dutch Bros has won acclaim for its Dutch Classics, drinks based on espresso and half and half. Other beverages such as teas, smoothies, lemonades, and other beverage also help drive sales.
Additionally, the stock should soar amid its rapid regional-to-national expansion. With a 10 to 15-year goal of growing to 4,000 locations, the rapid development should continue to caffeinate its already rapid growth.
The growth of Dutch Bros
The move to 4,000 is happening quickly. As of the end of the third quarter of 2024, Dutch Bros operated 950 locations in 18 states, an increase of 156 shops, or 20%, over the previous year.
Not surprisingly, that has profoundly affected its financials. Revenue in the first three quarters of 2024 was $938 million, a 32% increase from year-ago levels. That also included a same-shop sales increase of 5% over that timeframe, pointing to an increase in the chain’s popularity.
It helped turn around a stock that has largely been depressed since its 2021 IPO. Thanks mostly to a spike sparked by its Q3 2024 earnings report, its stock is up by around 80% over the last year.
Its recent turn to profitability leaves it with a triple-digit P/E ratio. Nonetheless, the growth of its price-to-sales (P/S) ratio of 4.4 means it is now more expensive than Starbucks, whose sales multiple remains under 3.
Also, Dutch Bros 950 shop footprint makes it a small fraction of Starbucks’s global footprint of over 40,000, making it comparatively easier for Dutch Bros to grow rapidly. That dramatically reduces the long-term risk of its higher sales multiple and leaves ample room for growth as Dutch Bros’s brisk pace of development continues.
