Shares of Dutch Bros (BROS +4.55%), the drive-thru-focused coffee chain in the Western U.S., were climbing the charts this week after the company delivered a strong first-quarter earnings report.
As of Thursday at 12:52 p.m. ET, the stock was up 17.4%, according to data from S&P Global Market Intelligence. The company's strong quarterly results also drew a notable contrast with Starbucks, the global coffee giant, which posted weak results in its earnings report last week.
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Dutch Bros pleases the market
Strong first-quarter results were the main reason the stock was moving higher this week. Dutch Bros. said in its Tuesday afternoon earnings report that revenue jumped 39.5% to $275.1 million, which was well ahead of the consensus at $255.9 million.
That growth was paced by a same-store sales increase of 10%, and continued expansion as the company opened 45 new stores in the quarter, 40 of which were company-owned, in 14 states.
Dutch Bros also said that average unit volumes reached $2 million for the first time, showing that demand continues to build at individual locations even as it expands its footprint.
The fast-growing restaurant chain also showed off significant improvements in operating leverage as company-operated shop gross profit nearly doubled to $54.3 million, and selling, general, and administrative expenses were essentially flat in the period.
As a result, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 120% to $52.5 million, and adjusted earnings per share increased from breakeven to $0.09, well ahead of the consensus at $0.02.
NYSE: BROS
Key Data Points
Can Dutch Bros keep gaining?
The coffee chain built on momentum from 2023 in the quarter, and saw benefits from its rewards program as 66% of all transactions came from rewards members.
The company hiked its full-year revenue guidance from $1.19 billion-$1.205 billion to $1.20 billion-$1.215 billion, and lifted adjusted EBITDA guidance from $185 million-$195 million to $195 million-$205 million.
It continues to expect same-store sales growth in the low single digits for the year.
While investors might like to see a more aggressive guidance raise, overall, Dutch Bros is clearly executing on its growth strategy, seeing increasing demand, and converting revenue into profits. It's not surprising the stock would be rewarded after a quarter like that.
