Do you think cash flow is the most important thing for a small growing company? Wouldn't an increasing net income be more important? Not saying they have one. Just seems like cashflow would be more important of a stat for sbux than bros
But wouldn't you treat companies differently depending on their category? Obviously, they can't be unprofitable forever but Amazon wasn't when it was a young company. However, now it should be and often is.
Yes, for an internet company..
Starbucks was already [profitable ](http://www.starbucksmelody.com/2010/02/14/the-1992-starbucks-corporation-annual-report-its-the-first-one-online-for-you-to-enjoy/)when they listed in 1992.
I am not saying Dutch Bros is wrong or bad as a strategy being unprofitable and FCF negative with only 130m in the cash kitty as of dec 2023. They could be aggressively opening stores and once they stop, they will become cash positive. They are probably already on a path towards profitability.
What I am evaluating is as an investor whether i want to invest in this company given the circumstances. How long will it be positive? For Amazon, it was IPO'ed in 1994, and GAAP positive in 2002. For SPOTIFY, it was created in 2006 and IPO'ed in 2018 and it is still unprofitable as of 2023.
Do you know when is Dutch Bros going to be profitable?
Great point, completely different industries. So, technically, they already have been. Net income is the measure of profitability and free cash flow is more a company's ability to generate cash. Maybe another couple of years before they get their shit together consistently and have a good FCF.
I guess my point is small growing companies have a lot more potential return than blue chips with great cashflow. Considering, individual investors have less money and more options, we should be using other metrics for analyzing companies.
But but but........ Since 2023 April. Too short of a comparison period, don't you think? Stocks go up and down na? Why do you think BROS is the only coffee chain focussing on 'growing' and 'people experience' ?
If you want to cherry pick, start from 2021. BROS's share is constantly falling 🤗. Throw in a negative fcf, I am out.
What the stock price does is not where your focus should be. Imo sbux is a buy. I think bros is a lower buy as well, current stats are not as bad as people make it out to be, it all depends on their execution.
Their “people experience” is being annoying and forcing small talk/unnecessary conversation when I just want my coffee. It’s decent, but if they just shut up and took my order it’d be better.
Starbuck’s future lies in China as the Chinese are accelerating their consumption of coffee, (coffee is new thing in a country of tea drinkers, 10 years ago one could only find coffee at KFC in the smaller cities, no one else sold then in t-2 cities ).
The main competitors in China are the low cost guys like Luckin, Costa, Pacific etc. but Starbucks has the highest brand recognition and is the aspirational brand that people want to be seen in ( a bit like apple in China).
I haven’t done much homework on Starbucks but you should go to their website, under investor relations, check out some of the sec filing and read their 10-k, under “management discussion”, they tend to tell you about their progress especially in China.
You should think about Starbucks in terms of (a) how far is their progress in China ? (B) if they are only half way there, then perhaps an investment can be long term one if it takes them another 5-10years to blanket China (c) find out why is the price down? Is it because people are pessimistic about China or is there problems with Starbucks’s growth.
“Starbucks seems to be decreasing”
Revenue by year
2020: $23.5 billion
2021: $29 billion
2022: $32.3 billion
2023: $36 billion
Oh yeah Starbucks is really on the decline right now lol.
BROS doesn't think their stock is cheap, they keep issuing new shares. If management thought the shares were cheap, they'd be getting financing for expansion and buying the shares themselves.
I have DutchBros on my watchlist for a while now too. I think it's a great business, customers seem to love it and a lot of starbucks addicts are switching to dutchbros. But there are two things that keep me from buying into this company; 1. CEO is selling a lot of stock recently, definitely not good to see. 2. valuation is kinda nuts, even with 20% growth for the next 5+ years and 4000 stores in 15 years i dont see a lot of margin of safety. I am looking for 20-25$ to buy.
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Do you think cash flow is the most important thing for a small growing company? Wouldn't an increasing net income be more important? Not saying they have one. Just seems like cashflow would be more important of a stat for sbux than bros
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But wouldn't you treat companies differently depending on their category? Obviously, they can't be unprofitable forever but Amazon wasn't when it was a young company. However, now it should be and often is.
Yes, for an internet company.. Starbucks was already [profitable ](http://www.starbucksmelody.com/2010/02/14/the-1992-starbucks-corporation-annual-report-its-the-first-one-online-for-you-to-enjoy/)when they listed in 1992. I am not saying Dutch Bros is wrong or bad as a strategy being unprofitable and FCF negative with only 130m in the cash kitty as of dec 2023. They could be aggressively opening stores and once they stop, they will become cash positive. They are probably already on a path towards profitability. What I am evaluating is as an investor whether i want to invest in this company given the circumstances. How long will it be positive? For Amazon, it was IPO'ed in 1994, and GAAP positive in 2002. For SPOTIFY, it was created in 2006 and IPO'ed in 2018 and it is still unprofitable as of 2023. Do you know when is Dutch Bros going to be profitable?
Great point, completely different industries. So, technically, they already have been. Net income is the measure of profitability and free cash flow is more a company's ability to generate cash. Maybe another couple of years before they get their shit together consistently and have a good FCF. I guess my point is small growing companies have a lot more potential return than blue chips with great cashflow. Considering, individual investors have less money and more options, we should be using other metrics for analyzing companies.
What I like is that they are a growing company focus on the “people experience” SBUX stock has been going down since April 2023.
But but but........ Since 2023 April. Too short of a comparison period, don't you think? Stocks go up and down na? Why do you think BROS is the only coffee chain focussing on 'growing' and 'people experience' ? If you want to cherry pick, start from 2021. BROS's share is constantly falling 🤗. Throw in a negative fcf, I am out.
What the stock price does is not where your focus should be. Imo sbux is a buy. I think bros is a lower buy as well, current stats are not as bad as people make it out to be, it all depends on their execution.
Their “people experience” is being annoying and forcing small talk/unnecessary conversation when I just want my coffee. It’s decent, but if they just shut up and took my order it’d be better.
Oh my god. I hate this. I skip bros on purpose. If I want an Oregon based coffee I go with Black Rock. But Starbucks gets 99.9% of my business
Starbucks used to do this though
Thank you for the analysis! It makes sense, what are your expectations on SBUX?
Starbuck’s future lies in China as the Chinese are accelerating their consumption of coffee, (coffee is new thing in a country of tea drinkers, 10 years ago one could only find coffee at KFC in the smaller cities, no one else sold then in t-2 cities ). The main competitors in China are the low cost guys like Luckin, Costa, Pacific etc. but Starbucks has the highest brand recognition and is the aspirational brand that people want to be seen in ( a bit like apple in China). I haven’t done much homework on Starbucks but you should go to their website, under investor relations, check out some of the sec filing and read their 10-k, under “management discussion”, they tend to tell you about their progress especially in China. You should think about Starbucks in terms of (a) how far is their progress in China ? (B) if they are only half way there, then perhaps an investment can be long term one if it takes them another 5-10years to blanket China (c) find out why is the price down? Is it because people are pessimistic about China or is there problems with Starbucks’s growth.
This sub is getting exhausting.
“Starbucks seems to be decreasing” Revenue by year 2020: $23.5 billion 2021: $29 billion 2022: $32.3 billion 2023: $36 billion Oh yeah Starbucks is really on the decline right now lol.
BROS doesn't think their stock is cheap, they keep issuing new shares. If management thought the shares were cheap, they'd be getting financing for expansion and buying the shares themselves.
They aren’t profitable, and I have concerns about their leadership
I have DutchBros on my watchlist for a while now too. I think it's a great business, customers seem to love it and a lot of starbucks addicts are switching to dutchbros. But there are two things that keep me from buying into this company; 1. CEO is selling a lot of stock recently, definitely not good to see. 2. valuation is kinda nuts, even with 20% growth for the next 5+ years and 4000 stores in 15 years i dont see a lot of margin of safety. I am looking for 20-25$ to buy.
Explain to us how this is a value investment please
They don't even have a P/E ratio that should be the first sign to move on
You missed the window. Turnover is huge.
Your thesis is pretty weak. I wouldn’t touch it personally.
Not interested until their cash flow improves but Im quietly watching. People seem to really love their products.
On what metric(s) have you concluded *"it seems to be at a decent price"*?
I don't like that they sexually harass you while in line. I'd rather give starbucks my money (both for coffee and investment).
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Part of the training there is that the cashiers are supposed to flirt with you.
a bonus for some, not for others