Value
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 0.0 |
| P/S | 5.4 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 2.0 |
| PEG | 3.9 |
| Analyst target | 4.0 |
- ▸Forward P/E: 57.6x
- ▸PEG: 2.63
- ▸Expensive valuation
BROS · Why this verdict
Why Dutch Bros (BROS) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score4.7/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is growing at 31% year-over-year, placing the company among the top growth operators in its industry peer group—a trajectory that, if sustained, would provide the foundation for eventual valuation normalization. Growth breakdown | Revenue growth remains above 20% year-over-year for at least two consecutive quarters over the next 12 months. | →Stable |
| CounterAt a forward price-to-earnings ratio of 53.3 times and a PEG ratio of 2.61, the valuation already extrapolates a long runway of elevated growth; any deceleration toward industry-average rates would trigger a sharp multiple contraction. | ||
At a forward price-to-earnings ratio of 53.3 times and a PEG ratio of 2.61, the shares screen as expensive, with the current target implying only 3.7% price headroom from current levels—leaving no margin of safety for any execution shortfall. Valuation breakdown | For valuation to reach a more reasonable level, the forward multiple would need to compress below 35 times, which requires earnings growth to outpace the current price appreciation. | →Stable |
| CounterHigh-growth category leaders can sustain premium multiples for extended periods if unit economics improve and revenue continues to compound; the valuation may be rational if the growth runway extends further than consensus currently prices. | ||
Free cash flow is converting at approximately 49 cents for every dollar of net income, meaning reported earnings are running materially ahead of cash actually being generated—a level the data explicitly flags as a quality concern. Quality breakdown | Free cash flow as a percentage of net income rising above 80% over the next two fiscal years would resolve the quality concern. | →Stable |
| CounterCash conversion lag can be transitory during periods of heavy growth investment; if the gap closes as the business matures, the quality penalty in today's assessment may prove premature. | ||
A short interest level of 44% of the float introduces significant headline risk in both directions—a strong earnings beat can ignite a sharp covering rally, while any operational stumble amplifies the downside with forced-seller dynamics. Risk breakdown | Short interest declining below 20% of the float would signal that the bearish thesis is losing adherents and the risk overhang is easing. | →Stable |
| CounterElevated short interest that persists over multiple quarters typically reflects genuine concerns about valuation or business quality; the collective market skepticism may prove correct, particularly given the combination of expensive multiples and below-par cash conversion. | ||
Revenue is growing at 31% year-over-year, placing the company among the top growth operators in its industry peer group—a trajectory that, if sustained, would provide the foundation for eventual valuation normalization.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 20% year-over-year for at least two consecutive quarters over the next 12 months.
CounterAt a forward price-to-earnings ratio of 53.3 times and a PEG ratio of 2.61, the valuation already extrapolates a long runway of elevated growth; any deceleration toward industry-average rates would trigger a sharp multiple contraction.
At a forward price-to-earnings ratio of 53.3 times and a PEG ratio of 2.61, the shares screen as expensive, with the current target implying only 3.7% price headroom from current levels—leaving no margin of safety for any execution shortfall.
→StableValuation breakdown
- Expectation
- For valuation to reach a more reasonable level, the forward multiple would need to compress below 35 times, which requires earnings growth to outpace the current price appreciation.
CounterHigh-growth category leaders can sustain premium multiples for extended periods if unit economics improve and revenue continues to compound; the valuation may be rational if the growth runway extends further than consensus currently prices.
Free cash flow is converting at approximately 49 cents for every dollar of net income, meaning reported earnings are running materially ahead of cash actually being generated—a level the data explicitly flags as a quality concern.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income rising above 80% over the next two fiscal years would resolve the quality concern.
CounterCash conversion lag can be transitory during periods of heavy growth investment; if the gap closes as the business matures, the quality penalty in today's assessment may prove premature.
A short interest level of 44% of the float introduces significant headline risk in both directions—a strong earnings beat can ignite a sharp covering rally, while any operational stumble amplifies the downside with forced-seller dynamics.
→StableRisk breakdown
- Expectation
- Short interest declining below 20% of the float would signal that the bearish thesis is losing adherents and the risk overhang is easing.
CounterElevated short interest that persists over multiple quarters typically reflects genuine concerns about valuation or business quality; the collective market skepticism may prove correct, particularly given the combination of expensive multiples and below-par cash conversion.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Dutch Bros operates a high-growth concept with four consecutive earnings beats and 31% year-over-year revenue expansion, but free cash flow converting at only 49% of net income, a forward multiple of 53 times earnings, and 44% short interest combine to make the current setup unfavorable for new capital at these levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.6 |
| ROA | 2.5 |
| Gross margin | 1.1 |
| Op margin | 3.1 |
| Net margin | 2.3 |
| Current ratio | 5.0 |
| FCF quality | 3.9 |
| Moat | 5.4 |
| Piotroski F | 4.4 |
- ▸Earnings quality RED FLAG: 49% FCF/NI
- ▸No competitive moat
Growth
6.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 2.0 |
- ▸Strong growth: 31% YoY
Momentum
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 8.0 |
| Volume | 2.2 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.6 |
| Analyst rating | 9.0 |
| Price target | 6.4 |
- ▸LLM news sentiment: +0.33 (n=10)
Insider
3.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 2.0 |
| insider conviction | 2.2 |
| holder change | 5.2 |
- ▸Heavy insider selling — $359,231,535 (2.850% of mkt cap)
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.3 |
| quality rank | 5.0 |
| growth rank | 9.4 |
- ▸Industry growth leader
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.2 |
| support resistance | 0.9 |
| 52w position | 8.5 |
Risk (lower is worse)
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 0.0 |
| days to cover | 6.2 |
| volatility | 1.4 |
| put call | 7.3 |
| implied vol | 4.2 |
| beta | 2.1 |
| debt equity | 4.5 |
- ▸High short interest: 40%
Catalyst
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:5.2>=4.5
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:33d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.1=NEGATIVE
- INSIDER:2.85%=EXTREME
Warning (1)
- MOMENTUM:5.2<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-0.08
Upside
-1.3%
Downside
15.0%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 67, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 2.37>1.3
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Catalyst at 7.6 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:-0.1=NEGATIVE.
The strongest dimensions are Catalyst at 7.6, Sentiment at 7.4, and Growth at 6.0; the weakest are Value at 2.7, Insider at 3.1, and Quality at 3.6. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.08 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Rapid Revenue Expansion
Trip ifRevenue growth falls below 15% year-over-year for 2 consecutive quarters.
- P2Stretched Valuation Minimal Upside
Trip ifForward P/E multiple compresses below 35 times on current consensus estimates.
- P3Weak Cash Conversion Quality Concern
Trip ifFree cash flow as a percentage of net income rises above 80% for 2 consecutive quarters.
- P4High Short Interest Headline Risk
Trip ifShort interest falls below 20% of the float for 2 consecutive months.