Dutch Bros Inc.'s (NYSE:BROS) Path To Profitability
We feel now is a pretty good time to analyse Dutch Bros Inc.'s (NYSE:BROS) business as it appears the company may be on the cusp of a considerable accomplishment. Dutch Bros Inc. operates and franchises drive-thru shops. The company’s loss has recently broadened since it announced a US$592m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$680m, moving it further away from breakeven. Many investors are wondering about the rate at which Dutch Bros will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Dutch Bros
Consensus from 8 of the American Hospitality analysts is that Dutch Bros is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$22m in 2022. The company is therefore projected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 47%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Dutch Bros' growth isn’t the focus of this broad overview, however, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 17% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Dutch Bros which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Dutch Bros, take a look at Dutch Bros' company page on Simply Wall St. We've also put together a list of important aspects you should further examine:
Valuation: What is Dutch Bros worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Dutch Bros is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Dutch Bros’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
