Dutch Bros Inc. BROS has delivered a blistering performance in the past month, leaving the broader market in the dust. The stock has gained 38.1% in the same time frame, outpacing the industry’s modest 2.6% growth and the S&P 500’s 0.3% decline.

Over the past month, BROS has outperformed its peers including, Kura Sushi USA, Inc. KRUS, Chipotle Mexican Grill, Inc. CMG and McDonald's Corporation MCD.

Price Performance

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Technical indicators imply BROS's continued strong performance. The stock is trading above its 50-day moving average, signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment and confidence in BROS's financial health and prospects.

50-Day Moving Average

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Decoding Potential Tailwinds Behind BROS’s Rally

Dutch Bros’s recent share price increase can be primarily attributed to robust fourth-quarter 2024 results and upbeat guidance for 2025. BROS delivered 34.9% year-over-year revenue growth in the fourth quarter. The company is benefiting from strong brand momentum, accelerated expansion and increasing customer engagement through mobile and loyalty programs.

As of Dec. 31, BROS reported significant progress in expanding mobile ordering capabilities, with approximately 96% of system-wide locations and 99% of company-operated stores offering this functionality. Customers have been increasingly utilizing mobile orders, with Rewards members making 5.4 million transactions through this channel.

Mobile ordering has shown strong adoption, particularly during the morning rush and for coffee-based beverages, reinforcing the company’s strategy to enhance convenience and capture greater market share in the morning daypart. This digital shift has also contributed to improved traffic trends in the fourth quarter, with mobile orders accounting for about 8% of the overall sales mix, reflecting a steady increase each quarter. Notably, in newer markets, mobile order penetration has been more than double the system-wide average, highlighting its growing importance in driving customer frequency and engagement.

The company’s real estate strategy and investment in new markets are proving successful, enhancing new shop productivity. Dutch Bros has invested significantly in its development team and processes, positioning the company for continued growth.

In 2025, it plans to open at least 160 shops, with accelerated growth expected in 2026. The company remains confident in its long-term growth prospects, supported by strong revenues, innovation, advertising and an expanding mobile order base.

For 2025, the company expects year-over-year revenue growth of 21-23%. Same-shop sales growth is estimated between 2% and 4%. The company expects adjusted EBITDA between $265 million and $275 million, suggesting 15-20% Y/Y growth.

Dutch Bros’s Estimate Revisions

In the past 30 days, five and three analysts have revised earnings estimates for 2025 and 2026, respectively. In the past 30 days, analysts have raised their estimates for the current and the next years by 8.6% to 63 cents and 13.3% to 85 cents, respectively. These estimates indicate year-over-year growth rates of 28.6% and 35.6%, respectively.

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Factors to Hinder BROS’s Stock Price Movement

Elevated coffee bean prices are expected to impact margins in 2025, leading to a projected cost pressure of 110 basis points on company-operated stores. Wage investments in shop leadership are anticipated to offset some operational leverage. Dutch Bros is navigating a highly competitive beverage industry, requiring continuous innovation and marketing investment to sustain momentum.

Dutch Bros Trades at Premium Valuation

BROS is trading at a premium to the industry, with a forward 12-month price-to-earnings of 125.75X, which is well above the industry average of 27.3X.

Conclusion

Dutch Bros has demonstrated impressive stock performance, driven by strong revenue growth, expansion efforts, and increasing customer engagement through mobile ordering and loyalty programs. The company’s investments in real estate and shop development are contributing to its long-term growth outlook, with significant openings planned. However, rising input costs, particularly from elevated coffee bean prices and wage investments, may pressure margins in the near term. Additionally, the stock is trading at a steep premium relative to industry peers, suggesting limited upside potential at current levels.

While Dutch Bros remains well-positioned for long-term growth, existing investors may benefit from holding their positions, while new investors should wait for a more favorable entry point. BROS 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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This article originally published on Zacks Investment Research (zacks.com).

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