Dutch Bros vs. Starbucks: Which Coffee Stock Has More Growth Potential?

The excitement around Starbucks Corp. (NASDAQ: SBUX) and Dutch Bros Inc. (NYSE: BROS) stocks has faced recent challenges due to soaring coffee prices. Over the past month, Starbucks has seen its stock price drop by more than 4%, while Dutch Bros has faced an even steeper decline of over 12%.

Additionally, concerns about impending tariffs and the potential for a recession have raised questions among investors. Are these stocks nearing fair value, or are they dangerously dropping? Despite both companies showing strong fundamentals, investors are eager to explore their growth potential.

Starbucks Overview

$98.11 +2.07 (+2.16%)

As of 03/14/2025 04:00 PM Eastern

52-Week Range

$71.55

▼

$117.46

Dividend Yield

2.49%

P/E Ratio

31.65

Price Target

$105.75

Starbucks stands as a global leader in the coffee retail market, showcasing nearly 17,000 locations across the United States as of February 2025. The company has reshaped consumer perceptions of coffee shops, moving beyond the concept of local cafes.

The dominance of Starbucks is evident in its finances, with the company recording earnings of $3.10 per share from a total revenue of $36.1 billion in 2024. However, both figures represent a decline from the previous year (YoY). This decline has prompted the company to undergo a transformation managed by former Chipotle Mexican Grill CEO Brian Nichol.

Dutch Bros Overview

$62.40 +2.79 (+4.68%)

As of 03/14/2025 03:59 PM Eastern

This is a fair market value price provided by Polygon.io. Learn more.

52-Week Range

$26.85

▼

$86.88

P/E Ratio

183.53

Price Target

$75.75

As a relatively new player in the market, Dutch Bros has captured the attention of investors since its public debut in 2021. The company has developed a loyal customer base, drawn by its unique drink offerings and community-focused initiatives.

As of February 2025, Dutch Bros celebrated the opening of its 1,000th location in Orlando, Florida. Despite the recent stock sell-off, BROS shares have performed well, gaining 11% in 2025 and an impressive 92.6% over the past year.

The Rising Cost of Coffee

Regular visitors to their favorite coffee spots have likely noticed the increase in coffee prices. Arabica coffee prices have soared by over 70% since November 2024, reaching record highs in February—levels not seen since 1977.

While tariffs are a contributing factor to this price surge, the market's uncertainty about any new tariff implementations complicates the situation further. Coffee futures experienced a sharp increase in January after the previous administration hinted at a potential 25% tariff on countries that supply 30% of U.S. coffee imports.

Moreover, Brazil's ongoing issues, particularly the “black frost,” have significantly affected coffee production. This problem arises as the country grapples with a severe drought—factors that impact Dutch Bros as they source their beans primarily from Brazil, Colombia, and El Salvador, making up the company's Private Reserve Blend.

Starbucks, on the other hand, enjoys a broader sourcing strategy, procuring coffee from over 30 countries, including regions in Africa and Asia/Pacific. Yet, despite this diversity, Starbucks accounts for around 3% of the global coffee supply, leaving it vulnerable to pricing pressures in the coffee market.

Investment Considerations

Both Starbucks and Dutch Bros stocks are trading at elevated valuations. Currently, BROS shares are valued at over 111 times forward earnings, making SBUX shares appear more reasonably priced at approximately 35 times forward earnings.

Investors seeking growth must weigh these high valuations, noting that both stocks remain above their 200-day simple moving averages despite recent downturns.

For those who prioritize growth, they might consider a drop below the 200-day moving average as an opportune entry point for BROS, which, even at high valuations, has the potential for earnings growth and market expansion while being less affected by rising coffee prices.

Should You Invest in Dutch Bros Now?

Before making an investment in Dutch Bros, it's essential to review expert opinions. MarketBeat tracks leading research analysts and the stocks they endorse daily. Although Dutch Bros holds a Buy rating, many top analysts suggest there are other stocks with greater potential ahead.

Finding the next big stock requires diligence, so consider looking at the recommendations from these analysts to identify the stocks that could outperform in the coming months.

Stocks, Starbucks, DutchBros