Have you been paying attention to shares of Dutch Bros (BROS)? Shares have been on the move with the stock up 51.4% over the past month. The stock hit a new 52-week high of $52.98 in the previous session. Dutch Bros has gained 66.2% since the start of the year compared to the 24.6% move for the Zacks Retail-Wholesale sector and the 6.5% return for the Zacks Retail - Restaurants industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 6, 2024, Dutch Bros reported EPS of $0.16 versus consensus estimate of $0.12 while it beat the consensus revenue estimate by 4.24%.
For the current fiscal year, Dutch Bros is expected to post earnings of $0.45 per share on $1.26 billion in revenues. This represents a 50% change in EPS on a 30.21% change in revenues. For the next fiscal year, the company is expected to earn $0.56 per share on $1.52 billion in revenues. This represents a year-over-year change of 25.08% and 20.94%, respectively.
Valuation Metrics
Dutch Bros may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Dutch Bros has a Value Score of F. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 116.9X current fiscal year EPS estimates, which is a premium to the peer industry average of 24.3X. On a trailing cash flow basis, the stock currently trades at 116.4X versus its peer group's average of 10.6X. Additionally, the stock has a PEG ratio of 3.63. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Dutch Bros currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Dutch Bros fits the bill. Thus, it seems as though Dutch Bros shares could have potential in the weeks and months to come.
How Does BROS Stack Up to the Competition?
Shares of BROS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Shake Shack, Inc. (SHAK). SHAK has a Zacks Rank of # 2 (Buy) and a Value Score of D, a Growth Score of B, and a Momentum Score of A.
Earnings were strong last quarter. Shake Shack, Inc. beat our consensus estimate by 25%, and for the current fiscal year, SHAK is expected to post earnings of $1.16 per share on revenue of $1.25 billion.
Shares of Shake Shack, Inc. have gained 9.9% over the past month, and currently trade at a forward P/E of 145.65X and a P/CF of 45.77X.
The Retail - Restaurants industry is in the top 33% of all the industries we have in our universe, so it looks like there are some nice tailwinds for BROS and SHAK, even beyond their own solid fundamental situation.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpDutch Bros Inc. (BROS) : Free Stock Analysis Report
Shake Shack, Inc. (SHAK) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
