A Look At Dutch Bros (BROS) Valuation After Recent Share Price Pullback

Recent share performance and business scale

Dutch Bros (BROS) has been drawing attention after a recent pullback, with the stock showing a month return of about a 14% decline and a year-to-date move close to a 14% decline from its last close of US$53.42.

Over the past year, the total return sits near a 37% decline, while the past 3 months are closer to a 5% gain. This gives a mixed picture if you are looking at different time frames.

Against that share performance backdrop, Dutch Bros reports annual revenue of about US$1.64b and net income of roughly US$79.84m, with both revenue and net income showing annual growth based on the figures provided.

See our latest analysis for Dutch Bros.

With the share price at US$53.42 and a 30 day share price return showing a 14% decline but a 3 year total shareholder return of about 41%, recent momentum looks softer than the longer term picture.

If Dutch Bros has you thinking about where growth and execution might matter next, it could be a good moment to scan 22 top founder-led companies for fresh ideas beyond this one name.

With Dutch Bros posting annual revenue of about US$1.64b and net income near US$79.84m, yet showing weaker recent returns, is this pullback a mispriced growth story or is the market already factoring in what comes next?

Most Popular Narrative: 30.7% Undervalued

At a last close of $53.42 versus a narrative fair value of about $77.10, the current price sits well below what this widely followed story assumes, setting up a clear tension between market caution and growth expectations built into the model.

The evolving menu, featuring specialty beverages, energy drinks, and an expanded food pilot, taps into the consumer trend toward premiumization and customization in beverages. These higher margin offerings and incremental morning daypart food sales support higher average ticket sizes and potential future margin and earnings growth. Tight operational control through a focus on company owned stores (versus franchising), more efficient new shop build outs, and labor and input cost management are creating operational leverage as scale increases, supporting higher net margins and earnings growth as new units mature.

Read the complete narrative.

Curious what kind of revenue changes, margin lift, and future earnings multiple have to line up to justify that gap between price and fair value, and how much growth the narrative is incorporating to keep those assumptions on track? The full story walks through those building blocks in detail.

Result: Fair Value of $77.10 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you still need to watch for rising labor costs squeezing margins and the risk that rapid unit growth will limit returns if newer shops underperform expectations.

Find out about the key risks to this Dutch Bros narrative.

Another View: High P/E Puts the Spotlight on Expectations

That 30.7% “undervalued” narrative sits awkwardly next to the current P/E of about 85x, compared with roughly 36.3x for peers and a fair ratio estimate of 28.9x. In plain terms, the share price already assumes a richer future. Which story do you think blinks first: the model or the market?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If the mix of optimism and concern around Dutch Bros leaves you undecided, consider reviewing the data yourself and act promptly to shape your own view, starting with 3 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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