Nio Falls As Earnings Beat But Outlook Falls Short – Investor's Business Daily

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Dutch Bros (BROS), a drive-thru coffee chain and recent IPO, reported third-quarter earnings after the close Wednesday that beat estimates, and it forecast fourth-quarter sales that were above expectations.

Dutch Bros stock rose after-hours. Shares finished the regular session lower, and were trying to hold onto a buy zone.

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The Oregon-based company reported just weeks after its debut, and as it competes against bigger coffee chains for younger customers.

Dutch Bros Earnings

Dutch Bros earned 23 cents per share. That was above FactSet estimates for six cents per share.

Revenue rose 49.8% to $129.8 million, also above estimates for $125.2 million. Same-store sales gained 7.3%, above expectations for a 5% increase.

Dutch Bros also forecast fourth-quarter revenue of between $125 million and $128 million. That was above Wall Street estimates for $121.4 million.

The company said it surpassed 500 open shops during the quarter, and said it had potential for “the potential for at least 4,000 shops nationwide.”

The chain said it expected to open at least 112 stores next year.

Dutch Bros Stock

Dutch Bros stock rose 2.7% to 64.00 after-hours in the stock market today.

Shares had fallen sharply from the record high of 81.40 on Nov. 1 that followed the late-October breakout.

Consequently, the stock has erased the bulk of its gain above that IPO base buy point of 62.10. BROS stock is still in buy range, technically, after undercutting that level intraday Wednesday.

IBD cautions that buying any stock ahead of earnings can be risky. Buying a new IPO before its first-ever earnings report as a public company is far more so. If Dutch Bros stock gets a post-earnings bounce, the advance could put shares out of the buy zone once again. But the move could offer an entry for aggressive traders.

Dutch Bros stock debuted on Sept. 15.

Starbucks (SBUX) dipped 0.08% after the close on Wednesday. McDonald’s (MCD) was unchanged after hours.

Dutch Bros — whose menu leans on espresso-based and cold, flavored beverages along with its Blue Rebel Energy drinks — has tried to take a less formal approach to coffee service. The company, whose 500-plus stores are concentrated in the Western part of the U.S., calls its baristas “broistas” and has a secret menu.

BofA analysts, in a research note last month on Dutch Bros stock, said that in the five years ending in 2019, U.S. specialty coffee and tea expanded at a compound annual growth rate of nearly 7%. That’s twice as fast as the broader industry, they said.

“These trends are the ‘demographic dividend’ of higher away-from-home coffee consumption among younger consumer cohorts,” BofA analyst Sara Senatore said in the note. “Dutch Bros customer base overindexes to these consumers.”

Starbucks’ quarterly sales, reported last month, took a hit after China instituted fresh coronavirus-related restrictions.

Dutch Bros has a 75 Composite Rating. Its EPS Rating is 38.

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