Advertisement
Canada markets closed
  • S&P/TSX

    22,690.39
    -36.37 (-0.16%)
     
  • S&P 500

    5,505.00
    -39.59 (-0.71%)
     
  • DOW

    40,287.53
    -377.49 (-0.93%)
     
  • CAD/USD

    0.7282
    -0.0016 (-0.22%)
     
  • CRUDE OIL

    80.25
    -2.57 (-3.10%)
     
  • Bitcoin CAD

    91,627.38
    +3,354.77 (+3.80%)
     
  • CMC Crypto 200

    1,378.36
    +47.47 (+3.57%)
     
  • GOLD FUTURES

    2,402.80
    -53.60 (-2.18%)
     
  • RUSSELL 2000

    2,184.35
    -13.94 (-0.63%)
     
  • 10-Yr Bond

    4.2390
    +0.0500 (+1.19%)
     
  • NASDAQ

    17,726.94
    -144.28 (-0.81%)
     
  • VOLATILITY

    16.52
    +0.59 (+3.70%)
     
  • FTSE

    8,155.72
    -49.17 (-0.60%)
     
  • NIKKEI 225

    40,063.79
    -62.56 (-0.16%)
     
  • CAD/EUR

    0.6690
    -0.0003 (-0.04%)
     

Further weakness as Dutch Bros (NYSE:BROS) drops 3.3% this week, taking one-year losses to 48%

It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. That downside risk was realized by Dutch Bros Inc. (NYSE:BROS) shareholders over the last year, as the share price declined 48%. That's well below the market decline of 12%. We wouldn't rush to judgement on Dutch Bros because we don't have a long term history to look at. Unfortunately the share price momentum is still quite negative, with prices down 24% in thirty days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

After losing 3.3% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for Dutch Bros

Because Dutch Bros made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

ADVERTISEMENT

In the last twelve months, Dutch Bros increased its revenue by 48%. That's a strong result which is better than most other loss making companies. The share price drop of 48% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. On the bright side, if this company is moving profits in the right direction, top-line growth like that could be an opportunity. Our brains have evolved to think in linear fashion, so there's value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on Dutch Bros

A Different Perspective

We doubt Dutch Bros shareholders are happy with the loss of 48% over twelve months. That falls short of the market, which lost 12%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 2.7%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term. But to understand Dutch Bros better, we need to consider many other factors. For instance, we've identified 1 warning sign for Dutch Bros that you should be aware of.

Dutch Bros is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here