Dutch Bros Inc. (NYSE: BROS)

Sector: Consumer Cyclical Industry: Restaurants CIK: 0001866581
Market Cap 8.05 Bn
P/B 12.26
P/E 129.63
P/S 5.24
ROIC (Qtr) 6.01
Div Yield % 0.00
Rev 1y % (Qtr) 25.24
Total Debt (Qtr) 1.04 Bn
Debt/Equity (Qtr) 1.58

About

Dutch Bros Inc., a Delaware corporation and commonly known as BROS, operates in the quick service beverage industry in the United States. Since its inception in 1992 by brothers Dane and Travis Boersma, Dutch Bros has grown to become one of the fastest-growing brands in its sector, with an impressive 831 shops spread across 16 states as of December 31, 2023. Dutch Bros specializes in serving high-quality, hand-crafted beverages through its convenient and accessible drive-thru shops. The company's product portfolio primarily consists of customizable...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 267.19M provide 7.33x coverage of short-term debt 36.47M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 278.14M provides strong 16.58x coverage of stock compensation 16.77M, indicating sustainable incentive practices.
  • Operating cash flow of 278.14M provides exceptional 10.06x coverage of interest expenses 27.65M, showing strong debt service capability.
  • Strong tangible asset base of 2.90B provides 2.80x coverage of total debt 1.04B, indicating robust asset backing and low credit risk.
  • Tangible assets of 2.90B provide exceptional 54.99x coverage of deferred revenue 52.71M, showing strong service capability backing.

Bear case

  • Operating cash flow of 278.14M barely covers its investment activities of (212.65M), with a coverage ratio of -1.31, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Free cash flow of 65.50M provides weak coverage of capital expenditures of 212.65M, with a 0.31 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 107.20M show weak coverage of depreciation charges of 128.30M, with a 0.84 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 128.30M relative to operating cash flow of 278.14M, which is 0.46x suggests significant maintenance capital requirements affecting free cash flow.
  • Free cash flow of 65.50M represents just -1.20x of debt issuance (54.50M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Restaurants
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MCD Mcdonalds Corp 222.05 Bn 26.39 8.45 55.82 Bn
2 SBUX Starbucks Corp 95.51 Bn 51.45 2.57 26.61 Bn
3 CMG Chipotle Mexican Grill Inc 50.94 Bn 33.15 4.32 4.98 Bn
4 YUM Yum Brands Inc 43.17 Bn 29.83 5.36 11.55 Bn
5 QSR Restaurant Brands International Inc. 22.43 Bn 24.33 2.42 15.64 Bn
6 DRI Darden Restaurants Inc 21.91 Bn 19.91 1.77 6.16 Bn
7 YUMC Yum China Holdings, Inc. 18.12 Bn 20.05 1.57 1.84 Bn
8 DPZ Dominos Pizza Inc 14.57 Bn 24.72 3.01 5.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.00 2.05
EV to Cash from Ops. EV/CFO 31.55 16.57
EV to Debt EV to Debt 8.47 4.75
EV to EBIT EV/EBIT 81.85 3.45
EV to EBITDA EV/EBITDA 32.34 9.76
EV to Free Cash Flow [EV/FCF] EV/FCF 133.97 29.06
EV to Market Cap EV to Market Cap 1.09 6.55
EV to Revenue EV/Rev 5.71 2.40
Price to Book Value [P/B] P/B 12.26 -1.40
Price to Earnings [P/E] P/E 129.63 13.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -9.56
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 18.72
Dividend per Basic Share Div per Share (Qtr) 0.00 0.84
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 30.41
Interest Coverage Int. cover (Qtr) 3.88 -86.85
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 7.22 -24.56
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -4.96 35.50
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.72
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 79.05 -564.81
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 39.81 25.78
EBIT Growth (1y) % EBIT 1y % (Qtr) 43.71 -507.68
EBT Growth (1y) % EBT 1y % (Qtr) 64.77 -41.98
EPS Growth (1y) % EPS 1y % (Qtr) 68.97 -126.51
FCF Growth (1y) % FCF 1y % (Qtr) 297,618.18 5,724.78
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 30.05 23.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.53 0.99
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.07
Cash Ratio Cash Ratio (Qtr) 1.19 0.78
Current Ratio Curr Ratio (Qtr) 1.52 1.47
Debt to Equity Ratio Debt/Equity (Qtr) 1.58 0.05
Interest Cover Ratio Int Coverage (Qtr) 3.88 -86.85
Times Interest Earned Times Interest Earned (Qtr) 3.88 -86.85
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 15.30 7.71
EBIT Margin % EBIT Margin % (Qtr) 6.97 -2.27
EBT Margin % EBT Margin % (Qtr) 5.17 -1.97
Gross Margin % Gross Margin % (Qtr) 26.30 34.04
Net Profit Margin % Net Margin % (Qtr) 4.00 -3.69