Jim Cramer - Mad Money Dutch Brothers BROS-N BUY Nov 08, 2023

The class-action suits are nonsense. A great stock, fine performer.

Have been overexpanding which hurts the franchise. Down 13% in the past 3 months.

They overexpanded and carry a heavy balance sheet.

Dutch Bros. grew way too fast. SBUX has a problem in China and the U.S. given the Israel-Hammas war. SBUX will miss its next report given weakness in China and the U.S. So buy SBUX $5 lower, because China is reawakening from its slumber and will come back.

Excellent company. Would recommend buying. 

It reported then shares plunged 20%. Reported a revenue beat, but didn't change their full-year guidance, including the lower end of new store openings. Fundamentals remain solid. Why the 20% drop??

BROS certainly has strong momentum, up nearly 45% year-to-date and is expensive at 97x forward price-to-earnings. It is expected to grow the top line at 20% annually over the next two years. Recent quarterly results were very strong with EPS beating estimates of 12c coming in at 16c. Revenue was $338.2M increasing 28% year-over-year and beating estimates of $324.8M. BROS has continued it rapid expansion rolling out 38 new stores in the quarter. Results were very strong and the company had breakeven free cash flow following the quarter. We think it looks solid, but would be cautious of debt levels as it does have $647M in net debt and the valuation is expensive.
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They have an investor day on Thursday. An expensive stock. A regional and national growth story, though.