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Is Dutch Bros (BROS) Priced For Its Long Term Cash Flow?

Simply Wall St · 1d ago

Dutch Bros has had a choppy ride, with the share price falling over recent months after a much stronger multi year run. The question now is whether the current US$38.76 price still lines up with what the business can generate in cash over time.

  • Over the past 3 years the stock is up about 66%, which puts a lot of weight on whether the underlying cash flows can support that kind of move.
  • The company’s model of rapid store expansion and upfront investment can shape when cash flows show up, which matters for any estimate of intrinsic value based on those future streams.
  • Prefer to judge Dutch Bros on earnings? See why Dutch Bros's 57.9x P/E tells a different valuation story.

The issue now is whether the stock’s recent pullback, after falling 7.7% over the past week and 22.3% over the past month and 37.6% year to date, leaves Dutch Bros trading in line with the cash flows implied by its intrinsic value estimate.

If you want more context on whether Dutch Bros fits your style of opportunities, it can help to compare it with 29 high quality undervalued stocks.

Is Dutch Bros Still Cheap on Cash Flow?

The Discounted Cash Flow model here looks at the cash that Dutch Bros can return to shareholders over time and discounts it back to today. Over the last twelve months, the business produced about $53.7 million of free cash flow, which is not a huge base, so the long runway in the projections does a lot of the heavy lifting in this valuation.

Analyst forecasts in the DCF assume that free cash flow grows meaningfully over the coming decade, with projected levels by 2030 many times higher than the latest twelve month figure. That kind of curve only tends to make sense if Dutch Bros keeps opening a lot of new locations and those shops eventually mature into solid cash generators. On these assumptions, the DCF output sits substantially above the current $38.76 share price. This indicates that the model is putting more weight on long term expansion than recent trading suggests. Find out what Dutch Bros could be worth using our Discounted Cash Flow (DCF) estimate.

The Dutch Bros Narrative: What Would Justify Today's Price?

Narratives on Simply Wall St’s Community page pick up where the valuation puzzle for Dutch Bros leaves off and spell out what kind of growth, profitability and earnings profile would need to unfold for the shares to be worth materially more or materially less than today’s price. Each view ties its number to a specific path for future expansion, margins and risk, which you can revisit as fresh information arrives.

One of the top community narratives on Dutch Bros: 50% undervalued

"The company's drive thru only model and continued focus on speed, convenience, and throughput improvement capitalize on accelerating consumer demand for off premise, convenient beverage solutions…"

Discover why this Narrative puts Dutch Bros at 50% undervalued.

One more Dutch Bros check that belongs next to the price tag

The cash flow story is only part of it, because the people setting priorities at Dutch Bros and the way they are rewarded can tilt outcomes in very different directions. See who runs Dutch Bros and how they are paid.

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.