Dutch Bros in Early 2025: Not a Buy Then
The stock was trading at around $55 a share, and while there were reasons to be optimistic about the brand, I didn’t think the valuation made sense relative to the risks. Since then, we’ve seen Dutch Bros go on quite a roller coaster. The stock shot up close to $90 a share, fueled by momentum and investor enthusiasm, but has since retraced all those gains and is now trading back at around $53.
Now, with all the recent stock market volatility, especially driven by the new wave of tariffs and macroeconomic uncertainty, investors are once again asking me to revisit Dutch Bros. They want to know if the stock is finally a buy — or if it’s still too risky at this stage.
So, in this articles, I'm going to do just that. I'm going to take a fresh look at Dutch Bros stock, update my valuation model, and give you my latest recommendation — whether I think the stock is a buy, hold, or sell given today’s environment.
A Volatile Ride: From $55 to $90 and Back
Now, let’s talk about Dutch Bros' price action.
This stock has been volatile. It spiked from $55 up to nearly $90 before falling right back to where it started — around $53. That’s a wild ride, and for long-term investors, it’s been frustrating to watch the stock make no net progress despite all the headlines and growth.
But when you separate the stock from the business, the story becomes more interesting.
Business Growth: Strong Revenue Momentum
The business itself has continued growing. Revenue over the trailing twelve months has climbed to $1.28 billion, up significantly from just $400 million back in 2021. That's more than a tripling of revenue in just a few years, and it shows how quickly Dutch Bros is scaling.
The company has been able to capitalize on a gap in the market — one that's being left by Starbucks, which has faced a number of challenges lately. Starbucks is struggling with execution and, arguably, suffering from diseconomies of scale. It’s gotten so big that managing operations across all of its geographies has become harder, and customer satisfaction has taken a hit.
Taking Market Share While Starbucks Struggles
Dutch Bros, on the other hand, is lean, nimble, and expanding. It currently has fewer than 1,000 locations, but the company’s long-term plan is to grow to over 4,000 stores across the U.S.
That’s an ambitious plan — but also one that fits within the context of the market. The global coffee market is estimated at over $400 billion per year in consumer spending. Dutch Bros, with just over $1 billion in revenue, is still a tiny player, and that gives it a long growth runway if it can execute properly.
Why Tariffs Could Actually Help
Let’s talk about the macro environment and tariffs. While higher tariffs
Now let’s shift gears and talk about the current economic environment — particularly the impact of tariffs.
We’ve seen new tariffs announced recently, especially on electronics, vehicles, and manufacturing inputs. This has investors worried about consumer demand, inflation, and even recession risk.
But I actually think Dutch Bros is positioned relatively well in this environment.
Here’s why: when consumers are hit with rising costs across major categories — think cars, iPhones, laptops, appliances — they often scale back spending on big-ticket items. But small indulgences like a cup of coffee become more attractive by comparison.
Even if the price of coffee rises by 25 or 50 cents, that’s still a minor increase compared to a $300 jump in the cost of an iPhone or a $3,000 bump on a new car. This "affordable luxury" effect helps companies like Dutch Bros weather the storm better than others.
Strong Operational Cash Flow
On the financial side, the company is generating strong cash flow.
Dutch Bros brought in $246 million in cash from operations over the past twelve months. With $1.28 billion in revenue, that’s about a CFO-to-sales ratio of over 20%, which is very healthy for a business that’s still aggressively reinvesting in growth.
Return on Capital Moving in the Right Direction
The company’s Return on Invested Capital (ROIC) has also improved — now sitting at 3.76%, up from earlier levels. That may not sound impressive yet, but you have to remember: this is still early days.
Same-store sales are growing, and revenue increased more than 30% in the most recent quarter. If this kind of performance continues, I believe ROIC could climb well above 10% in the next couple of years — and potentially over 20% within 5 to 10 years.
DCF Valuation: My Intrinsic Value = $91
Let’s talk valuation.
I ran a full discounted cash flow (DCF) model for Dutch Bros using a high weighted average cost of capital (WACC) of 19%. I’m using that number to reflect the risk: this is still a relatively small company, it’s growing fast, and it’s up against an entrenched player in Starbucks.
But even with that high discount rate, I calculate an intrinsic value of about $91 per share.
Free Cash Flow
That’s a full ~70% above where the stock is currently trading. So even with conservative assumptions — including negative free cash flow in 2025 due to capital expenditures for store growth — the long-term outlook supports a much higher valuation.
Keep in mind: while free cash flow is expected to go negative short-term, that’s not a red flag in this case. The company is spending heavily to open new locations, which is an investment in future cash flows. As those stores mature, I expect Dutch Bros to transition into a strong free cash flow generator.
Premium Valuation? Yes — But Justified
What about valuation multiples?
Well, Dutch Bros is currently trading at a forward P/E ratio of 65, which does sound expensive at first glance. But here's some context:
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This is a high-growth, capital-efficient company
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It’s operating in a massive market
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It's executing well, and
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It’s trading at its lowest forward multiple in the past three years
So in relative terms, this is the cheapest the stock has been since going public — and that’s despite stronger fundamentals today than at IPO.
Conclusion
To wrap things up: I’ve followed Dutch Bros closely for a while, and for a long time I had it rated as a Hold.
But today, given the pullback in valuation, the ongoing business momentum, the expanding cash flow, and the potential to take share in a large, fractured market — I’m officially upgrading Dutch Bros to a Buy.
It’s not without risk. Execution matters, and macro headwinds could affect growth. But for long-term investors with a high risk tolerance, I think this is an attractive entry point to start building a position.
Let me know in the comments — are you buying Dutch Bros here? Or are you waiting for a better entry point?
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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