BROS · Dutch Bros
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $40.66
Note written ·
Price against the kill line
11.7% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $40.66, on record since 11 November 2026. The shares are down 28.8% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $40.66, the 50-day average of closes, which would show the shares leading the S&P 500 again. A fourth-quarter systemwide same-shop transactions gain above the 1.7% reported for the second quarter would also show the case failing.
Research onlyNot in the portfolio.
Key figures from the filings · Consumer Discretionary
Quarter to 30 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 550
- Revenue, change on a year (%)
- +29.8
- Gross margin (%)
- 24.0
- Operating margin (%)
- 9.6
- Free cash flow, four quarters ($M)
- 90.9
- Net cash, cash less debt ($M)
- −4.9
- Price to earnings (×)
- 48.6
- Enterprise value to sales (×)
- 2.5
All filed numbers
What Dutch Bros reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 550 | +29.8 | 24.0 | 9.6 |
| first filed | 551 | +32.5 | 27.4 | 12.8 |
| first filed | 464 | +30.8 | 23.1 | 7.4 |
| first filed | 444 | +29.4 | 24.1 | 7.7 |
| first filed | 424 | +25.2 | 25.2 | 9.8 |
| first filed | 416 | +28.0 | 28.9 | 13.1 |
| Pre-tax income ($M) | Not reported |
| Net income ($M) four quarters: 102 | 27.2 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +8.5 |
| Operating cash flow ($M) | 377 |
| Capital spending ($M) | 286 |
| Free cash flow ($M) | 90.9 |
| Cash and short-term investments ($M) | 195 |
| Debt ($M) long-term debt | 200 |
| Net cash, cash less debt ($M) | −4.9 |
| Deferred revenue ($M) +11.9% on a year | 59.0 |
| Backlog, orders not yet delivered ($M) at 31 December 2025, filed 13 February 2026; −2.1% on a year | 2.6 |
| Receivables ($M) | 15.8 |
| Inventory ($M) | 42.0 |
| Shareholders' equity ($M) | 830 |
| Market value ($M) | 4,961 |
| Enterprise value, market value plus net debt ($M) | 4,966 |
| Enterprise value to sales (×) | 2.5 |
| Enterprise value to operating income (×) | 25.9 |
| Price to earnings (×) | 48.6 |
| Price to book value (×) | 6.0 |
| Free-cash-flow yield (%) | 1.8 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 14.7% of shares outstanding sold short, 4.8 days of average trading to cover, −2.9% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $133.3M |
| 12 monthsfrom | $205K | $451.2M |
The thesis
Dutch Bros Inc. still grows revenue near 30%, but customer visits rose only 0.4% in the third quarter and the profit outlook was lowered, so the shares are more likely to lag the S&P 500 than lead it over the next three months. The fourth-quarter report decides whether traffic recovers.
The shares closed at $35.01 on 11 November 2026, down 31.5% over three months and 52.7% below the 52-week intraday high of $74.02 on 2 July 2026. The close was $43.99 on 4 November 2026, the day of the report, and $34.57 on 5 November 2026. The 52-week closing low is $33.77 on 6 November 2026. Brokers cut targets after the report, and the 4 November 2026 Form 4 filings show the Executive Chairman and two affiliated 10% owners selling at an average $44.55 in the days before it, under a prewritten Rule 10b5-1 plan.
Bullish and bearish views on Dutch Bros Inc.
The bull case on Dutch Bros Inc. (BROS), in brief: revenue still grows near 30%. The bear case: customer traffic has nearly stalled.
Bull case
- Revenue still grows near 30%. Dutch Bros reported third-quarter 2026 revenue of $549.8 million, up 29.8% from $423.6 million a year earlier (company release, 4 November 2026). It had 1,273 shops at the end of the quarter, per Restaurant Business (5 November 2026).
- Sales landed in the guided range. Systemwide same-shop sales rose 4.4%, against management's guide of about 4% to 5% (company release, 4 November 2026; Q2 report, 5 August 2026). Company-operated same-shop sales rose 5.4%.
- Profit grew with sales. Net income was $37.2 million against $27.3 million a year earlier, and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, adjusted) was $101.1 million against $78.0 million (company release, 4 November 2026).
- The opening pipeline is accelerating. The company kept its target of at least 185 system openings in 2026 and set about 250 for 2027 (company release, 4 November 2026).
- Most brokers keep positive ratings. Telsey (Outperform, $56), Oppenheimer and BNP Paribas (Outperform, $54 each), KeyBanc (Overweight, $52), Wells Fargo and TD Cowen ($50 each) and Stephens (Overweight, $47) lowered targets on 5 November 2026 or 6 November 2026 and kept their ratings (Benzinga headlines). Investing.com lists Stifel initiating at Buy with a $48 target on 9 November 2026. Every one of these targets is above the $35.01 close.
Bear case
- Customer traffic has nearly stalled. Systemwide same-shop transactions rose 0.4% in the third quarter, down from 1.7% in the second quarter (company release, 4 November 2026). Company-operated visits rose 1.0% while company-operated same-shop sales rose 5.4%, so growth leans on spend per visit.
- The profit outlook came down. Full-year adjusted EBITDA guidance is about $380 million, against $385–390 million before the report. Same-shop sales guidance moved to at least 5% from 5–6%, and revenue guidance to at least $2.1 billion from $2.10–2.13 billion (company release, 4 November 2026; Restaurant Business, 5 November 2026).
- Competition is the investor worry. Restaurant Business reported on 5 November 2026 that investors fear McDonald's beverage launches and 7 Brew are pulling customers away. The chief executive said the company saw nothing on the competitive front and tied the guidance change to environmental uncertainty, including higher gas prices.
- Insiders sold into strength. Travis Boersma reported selling 2,388,812 shares at an average $44.55 from 2 November to 4 November 2026, and sales of 57,478 shares at $44.09 on 30 October 2026 (SEC Form 4 filings). The shares have since closed 21% to 24% lower than that sale price range at the 5 November to 11 November 2026 closes.
- Broker targets fell again. Wells Fargo and TD Cowen cut from $55 to $50 and Stephens to $47 (Benzinga headlines, 5 November 2026). RBC Capital kept Sector Perform and lowered its target to $38, the lowest in the group.
- Share issuance remains possible. Dutch Bros filed an automatic registration statement on 3 September 2026 that permits future securities offerings. A prospectus supplement naming new Class A shares would show an actual sale; none appears in recent filings.
Price setup
Closes fell from $43.99 on 4 November 2026 to $34.57 on 5 November 2026 and reached the 52-week closing low of $33.77 on 6 November 2026. The shares then closed at $36.01 on 9 November 2026, $35.29 on 10 November 2026 and $35.01 on 11 November 2026. The three sessions after the low stayed within about $1 of it, which is a pause, not yet a recovery.
The 200-day average of closes is $52.47, far above the last close, and the 50-day average sits above it as well. The shares trade below both, so the three-month trend is down. The 10-Q for the quarter ended 30 September 2026 is on file with the SEC (5 November 2026), and the earnings date has passed.
Catalysts ahead
- ~30 November 2026 (est.): Court approval of the 73-site Salad and Go sale to 7 Brew; no hearing date has been announced. Settles whether a rival takes sites Dutch Bros declined to bid up for.
- ~25 February 2027 (est.): Fourth-quarter and full-year 2026 report (date not yet announced). Shows whether systemwide same-shop transactions recover from 0.4% and whether the roughly $380 million adjusted EBITDA guide holds.
What would change the view
A daily close above $40.66, the 50-day average of closes, which would show the shares leading the S&P 500 again. A fourth-quarter systemwide same-shop transactions gain above the 1.7% reported for the second quarter would also show the case failing.
What it trades with
The shares trade with growth-oriented restaurant and consumer names. The 5 November 2026 selloff, when the VIX volatility index jumped 39% in an AI-technology selloff (headline of 5 November 2026), fell on the first session after the report, so broad risk appetite also moves the shares. The most direct competitor is 7 Brew, which won the Salad and Go sites on 1 September 2026. McDonald's beverage launches are the other competitive pressure Restaurant Business cited on 5 November 2026.
The evidence, claim by claim (7)
- Third-quarter 2026 revenue was $549.8 million, up 29.8% from $423.6 million; net income $37.2 million versus $27.3 million; adjusted EBITDA $101.1 million versus $78.0 million. Dutch Bros Q3 2026 results release (Form 8-K exhibit) · as of
- Systemwide same-shop sales rose 4.4% and systemwide same-shop transactions rose 0.4%; company-operated same-shop sales rose 5.4% and visits 1.0%. Dutch Bros Q3 2026 results release (Form 8-K exhibit) · as of
- Systemwide same-shop transactions rose 1.7% in Q2 2026, with systemwide same-shop sales up 5.8%. Dutch Bros Q2 2026 results release · as of
- Full-year 2026 guidance: revenue at least $2.1 billion, same-shop sales growth at least 5% (previously 5-6%), adjusted EBITDA about $380 million (previously $385-390 million), at least 185 system openings; about 250 openings planned for 2027. Dutch Bros Q3 2026 results release; Restaurant Business (NRN) 5 November 2026 · as of
- Executive Chairman Travis Boersma reported open-market sales of 2,388,812 shares at an average $44.55 on 2 November to 4 November 2026 under a Rule 10b5-1 plan; two affiliated 10% owners reported 831,480 and 1,557,332 shares at the same prices. SEC Form 4 filings · as of
- RBC Capital lowered its target to $38 (Sector Perform); Stephens to $47; Wells Fargo and TD Cowen to $50; KeyBanc to $52; Oppenheimer and BNP Paribas to $54; Telsey to $56. Benzinga analyst-rating headlines · as of
- The shares fell more than 16% in after-hours trading after the report; management said it saw nothing on the competitive front and attributed the guidance change to uncertainty in the environment. Restaurant Business (NRN), 'Dutch Bros stock plummets amid competition concerns' · as of
Sources