Shares of Dutch Bros (BROS +3.39%), the coffee chain known for its drive-thru business model, were taking a dive today after the company reported solid results in its second-quarter earnings. However, moderating new store growth spoiled otherwise strong results.
As of 1:20 p.m. ET, the stock was up 20.8%.
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Dutch Bros posted strong results
For the second quarter, Dutch Bros delivered healthy results, with same-store sales up 4.1% and total revenue growing 30% to $324.9 million, which beat analyst estimates at $317.1 million.
It saw continued margin improvement as its company-operated shop contribution margin rose 50 basis points to 30.8%, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA)Â jumped 34.1% to $65.2 million.
On the bottom line, adjusted earnings per share improved from $0.13 to $0.19, ahead of the consensus at $0.13.
CEO Christine Barone said, "Our quarterly performance demonstrates the long runway ahead for Dutch Bros as we once again delivered strong top-line and profitability growth." She also noted benefits from its Dutch Rewards program, with 67% of transactions coming from rewards members.
NYSE: BROS
Key Data Points
Store growth is slowing
Dutch Bros also raised its guidance for the full year. The company is now calling for revenue of $1.22 billion-$1.23 billion, up from $1.20 billion-$1.22 billion. It also sees same-store sales in the low-single digits and raised its adjusted EBITDA guidance from $195 million-$205 million to $200 million-$210 million.
However, the company now expects new store openings to come in at the lower end of its previously stated range of 150-165, which could slow growth modestly over the next few years.
That seemed to be the only weak spot in the earnings report, but after the report, the stock became expensive at a price-to-earnings ratio of 64, leading to the sell-off. Still, the sell-off seems exaggerated after otherwise strong results. If you're bullish on Dutch Bros, this looks like a good buying opportunity.
