About six weeks ago, Dutch Bros (NYSE:BROS) caught a serious updraft in the market after offering some guidance that got investors perking up like a morning with coffee. The latest earnings figures put a damper on that coffee buzz and sent shares plunging over 10% in Thursday’s trading. And things only got worse when Hedgeye weighed in.
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Hedgeye, via analyst Howard Penney, added Dutch Bros to the list of short ideas at the firm. Penney cited Dutch Bros’ “relentless focus on unit growth” and ignoring profitability in the process. This, in turn, creates potential issues going forward on par with those seen at Shake Shack (NYSE:SHAK). Penney slammed the last nail in the coffin by declaring that “we don’t see the company generating enough OCF to cover capital spending until fiscal year 2026…”
But it gets worse. Based on Dutch Bros’ recent earnings, Penney may have a point. While Dutch Bros turned in an impressive quarter, the future guidance didn’t look so hot. Revenue was up 44%, reports noted, hitting $201.8 million for the quarter. However, same-store sales were also down 0.6% as customers transferred from one location to another, and sales were split among more locations. Dutch Bros expects revenue for the full year to come in between $950 million and $1 billion even, almost matching analyst expectations that called for $981 million.
Currently, analysts hold out some hope for better days. Analyst consensus calls Dutch Bros a Moderate Buy. With an average price target of $40 per share, Dutch Bros stock has 17.56% upside potential.
