Why Dutch Bros Stock Crashed Today
Key Points
Dutch Bros reported 30% sales growth in Q3, ahead of estimates.
Earnings beat by a penny.
But at 60x earnings, was Dutch Bros stock priced for perfection already?
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Trendy coffee chain Dutch Bros (NYSE:BROS) stock is in its own personal bear market today, collapsing 20% through 11:45 a.m. ET Thursday after beating earnings by the slimmest of margins last night.
Heading into Dutch Bros' Q3 report, analysts expected the coffee maker to earn $0.24 per share on $548.6 million in sales.
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The Bros beat on top and bottom lines, earning $0.25 on $549.8 million.
Then investors sold them off anyway.
Image source: Getty Images.
Dutch Bros Q3 earnings
I have to say that's a strange reaction to an earnings beat, and by any measure, Dutch Bros' performance in Q3 was fantastic. Revenues grew 30% year over year, with company-operated stores growing same-store sales 5.4% and total SSS rising 4.4%.
The rest of the sales growth came from new store openings, and Dutch Bros is doubling down on that strategy, promising 250 new store openings in 2027. Even better, Dutch Bros' earnings are growing faster than its sales. Total company profit rose 36% to $37.2 million in the quarter, and earnings per share soared 43% to $0.20 per share.
(Actually, that number there is a yellow flag on Dutch Bros, with earnings calculated under generally accepted accounting principles (GAAP) lower than the $0.25 non-GAAP number.)
What's next for Dutch Bros stock
What seems to have upset investors more, though, was management's guidance for the rest of this year. Dutch Bros forecasts sales of $2.1 billion, which is technically slightly below Wall Street's $2.13 billion estimate. That said -- and this is important -- Dutch Bros forecasts "at least" $2.1 billion, so there's still a chance the Bros will meet, or even beat, the analyst forecast.
I don't know that this makes Dutch Bros stock a bargain at 60 times earnings, granted. But it's still not bad news for investors in this coffee stock.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Dutch Bros. The Motley Fool has a disclosure policy.
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