Dutch Bros (NYSE: BROS) stock has been a disappointment over the past year, but the market has finally started to recognize the opportunity, and it has soared 30% over the past month.
The coffee shop chain is in high-growth mode, and it has a compelling long-term opportunity. Is it still a strong buy right now?
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Popular beverages attract customers
Dutch Bros has cultivated a mass following by popularizing its innovative beverages and offering speed and convenience throughout its 1,000-plus store network, most of which are mostly drive-thru only stores. It’s far from “another coffee chain,” with exclusive drinks that make it borderline a coffee shop and a distinct brand identity.
The concept has taken off, and with a brand new C-suite and headquarters, it’s in start-up mode. Sales increased 31% year over year in the 2026 first quarter, and comparable sales were up 8.3%. It has reported seven consecutive quarters of transaction growth, an impressive feat given the broader inflationary environment. CEO Christine Barone said, “It is clear we are poised to continue shaping and commanding a leadership position in the large and growing beverage category.”
It has a massive expansion plan
The model has proved to work in different regions across the country, and while Dutch Bros started as a West Coast phenomenon, it has spread to 25 states with plans for a lot more. Its short-term goal is to operate 2,029 stores by 2029, and it’s aiming to reach 7,000 stores over an undefined “long term.”
For now, the company plans to open 185 stores in total for 2026, and it uses a “cluster” strategy of opening several stores in one area to build its brand and hit the new region quickly. That’s what it’s been doing in Texas, for example, and combined with intense marketing efforts, it resulted in almost 20% comps growth in the state in the first quarter.
Is it priced to buy?
All that said, Dutch Bros is an expensive stock. Even with its recent surge, it’s nominally down over the past year and still trades at 105 times trailing-12-month earnings. That’s quite a premium, even considering the company’s many wonderful qualities.
It’s likely to live up to its premium over the next few years, and if you can handle volatility, it’s a great stock to add to your portfolio. But it’s less appetizing at this price, and you might want to wait for a better entry point.