Key Points
Dutch Bros reported 40% diluted earnings-per-share growth in the second quarter.
The coffee stock has tremendous upside should it continue expanding its store base at a rapid pace.
Shares of Dutch Bros (NYSE: BROS) are taking it on the chin. They tanked 19% on Aug. 6, the day following the company's release of second-quarter financial results (quarter ended June 30).
The market's reaction doesn't seem warranted. The coffee stock posted 32.5% year-over-year revenue growth, with diluted earnings per share (EPS) soaring 40%. And it opened 48 new stores in the quarter.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Is it time to buy Dutch Bros on the dip?
Image source: Getty Images.
I think the stock's latest blip presents investors with a good opportunity to add this business to their portfolios. Dutch Bros has what it takes to be a winning investment in the coming five years.
The company's growth trajectory remains intact. It plans to open 185 net new coffee shops in 2026. And by 2029, the goal is for there to be 2,029 Dutch Bros locations, up from 1,225 today.
It's also worth highlighting how each shop is performing. Even in a highly uncertain macro backdrop, systemwide same-store sales rose 5.8% last quarter, continuing a 19-year streak of positive growth last year.
The consensus view among sell-side analysts is that Dutch Bros' revenue will surge at a compound annual rate of 27% between 2025 and 2028. Adjusted diluted EPS is projected to rise at a 28% annualized clip during that time.
With the stock trading at a reasonable price-to-sales multiple of 3.8, this forecast could propel the share price.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Dutch Bros. The Motley Fool has a disclosure policy.