Key Points
Dutch Bros "beat by a penny" last night.
That wasn't enough for investors, who may be spooked by stock dilution.
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Dutch Bros (NYSE: BROS) stock tumbled 9.6% through 10:45 a.m. Thursday despite beating on Q1 earnings report last night.
Analysts expected the coffee chain to earn $0.15 per share, pro forma, but the Bros poured out a $0.16 profit. Sales that were supposed to be $449.4 million came in at $464.4 instead.
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Dutch Bros Q1 earnings
Sales surged 31% year over year, with 8.3% coming from same-store sales growth, and the remainder from new store openings. Dutch Bros opened 41 new shops in the quarter, franchising eight and owning 33 of them.
That's the good news; now here's the bad: On earnings, it turns out the $0.16 figure was a non-GAAP number. Actual earnings calculated under generally accepted accounting principles (GAAP) were only $0.13 per share -- flat against last year's Q1.
(That number would have looked better, but Dutch Bros diluted its shareholders with stock issuances over the past year, growing its share count by 4.8% and spreading out profits among more shares outstanding.)
What's next for Dutch Bros stock?
Continuing to focus on sales growth, Dutch Bros raised its guidance for the rest of this year, promising revenue of $2.05 billion or more and same-store sales growth of 4% to 6%. The good news is that the company is free cash flow positive and will probably remain so this year.
Management noted it plans to spend about $280 million on capital investment in 2026. If analyst forecasts for $340 million in operating cash flow are correct, that should leave Dutch Bros with $60 million in positive cash profits this year, up about 10% from 2025.
That would still value the stock at roughly 120 times FCF, however. Pretty pricey for a cup of coffee if you ask me.
Should you buy stock in Dutch Bros right now?
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Rich Smith 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
