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Should You Buy, Sell or Retain Dutch Bros Stock at a 6.17X P/S?

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Dutch Bros Inc. (BROS - Free Report) is trading at a notable premium to its industry peers, with a forward 12-month price-to-sales (P/S) ratio of 6.17X, exceeding the industry average of 4.09X and the broader Retail-Wholesale sector’s 1.48X.

Dutch Bros P/S Ratio (Forward 12 Months)

 

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Despite its premium valuation, BROS has delivered a staggering 93.6% gain over the past year, dramatically outpacing the industry’s modest 1.1% increase and the S&P 500’s 7.9% rise. Notably, the stock has outperformed industry players like Kura Sushi USA (KRUS - Free Report) , Chipotle Mexican Grill (CMG - Free Report) and McDonald's (MCD - Free Report) , cementing its position as a standout growth story in the restaurant sector.

BROS Stock’s 1-Year Price Performance

 

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Factors Aiding Dutch Bros

BROS is capitalizing on its strong brand momentum, rapid expansion and increasing customer engagement through its digital and loyalty initiatives.

Dutch Bros is driving customer traffic through three core initiatives — innovation, paid advertising and its Dutch Rewards program. The company continuously enhances its product lineup with unique and seasonal offerings, such as Candy Cane and Hazelnut Truffle Mocha, alongside promotional giveaways that strengthen brand loyalty.

Increased investment in digital advertising has significantly boosted brand awareness, especially in new and mature markets. Meanwhile, the Dutch Rewards program has seen exceptional growth, with most transactions coming from loyalty members. Enhanced segmentation efforts are further improving personalized engagement, reinforcing Dutch Bros' competitive edge.

The company’s approach to real estate and investment in emerging markets is paying off, leading to enhanced productivity at new locations. Dutch Bros has also strengthened its development capabilities, setting the stage for sustained expansion.

BROS plans to open at least 160 shops in 2025, with an even faster pace expected in 2026. Management remains optimistic about its long-term growth, driven by strong revenue trends, product innovation, advertising efforts and the expanding mobile order platform.

For 2025, Dutch Bros projects year-over-year revenue growth of 21-23%, with same-shop sales increasing 2-4%. Adjusted EBITDA is expected between $265 million and $275 million, implying 15-20% annual growth.

BROS Stock Slips 13% in a Month Amid Margin Concerns

Despite delivering strong gains over the past year, Dutch Bros has declined 12.9% in the past month, underperforming the industry’s 4.1% drop. The pullback is largely led by broader market volatility and investor concerns over margin pressures.

Rising coffee bean prices are expected to weigh on margins in 2025, with company-operated stores facing an estimated 110-basis-point cost impact. Additionally, increased wage investments in shop leadership may offset some operational efficiencies. Operating in an intensely competitive beverage space, Dutch Bros must consistently innovate and invest in marketing to sustain growth and retain customer engagement.

Dutch Bros’ Earnings Estimates Dip

Over the past 30 days, Dutch Bros' 2025 earnings estimates have inched down to 62 cents from 63 cents. Despite this slight revision, the company has been on track for robust growth, with revenues projected to climb 23.4% year over year and earnings expected to rise 26.5%. This strong outlook underscores Dutch Bros’ ability to expand its market presence and drive profitability despite near-term headwinds.

 

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Final Thought for BROS Stock

Dutch Bros has demonstrated impressive growth, fueled by strong brand momentum, strategic expansion, and a rapidly growing digital and loyalty ecosystem. The company continues to outperform its peers, leveraging innovation, targeted advertising and an expanding store footprint to drive long-term success. 

However, the stock is currently trading at a premium valuation compared with industry standards. Recent market volatility, likely margin pressures from rising input costs and increased labor investments pose near-term risks. While Dutch Bros maintains a solid growth trajectory with robust revenue and earnings projections, these cost headwinds could weigh on profitability in the short term.

Given the current valuation and operational challenges, existing investors may benefit from holding their positions, while new investors should wait for a more attractive entry point as market conditions stabilize. The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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