Should you invest in Black Rifle Coffee?
Black Rifle Coffee Company (BRCC)—Starbucks of the right—is a Veteran-founded coffee company serving premium coffee to people who love America. BRCC is a rapidly growing coffee company with an incredibly loyal and expanding community of more than 1.9 million lifetime consumers, 270,000+ active coffee club subscribers, and a large and growing social media following.
The company led by Evan Hafer, himself a veteran, sells coffee in stores like Walmart and 7-Eleven, runs its own coffee shops, and sells online. BRCC will be going public in combination with an entity called SBEA and the deal is expected to close in the first quarter of 2022. Thanks to SPACs, which is short for special purpose acquisition company, Hafer has found investors with as strong a stomach as his mug-toting customers. However, will investors buy into Black Rifle? Is it a good investment?
How good is a cup of Black Rifle Coffee?
Black Rifle Coffee Company is a premium brand and they want to make sure you’re having a premium experience every step of the way. They offer quite a few coffee varieties, and many are conveniently available on Amazon. You can also order directly from the company’s website or an app for Apple and Android phones. This is excellent coffee made for people who know the difference. The flavors are strong and bold, the beans are aromatic and reasonably fresh, and the coffee bags are very convenient. Plus, this company donates a portion of its profits to law enforcement, veterans, and first responders.
However, Black Rifle's products typically aren't much cheaper than Starbucks' comparable offerings, and sometimes they're actually more expensive. There are plenty of local coffee shops that try to compete with Starbucks on coffee quality and fail. But none of them have the same vast name recognition and loyal following as BRCC. So, should you invest in Black Rifle Coffee Company?
Black Rifle Coffee's stock forecast
Since none of the analysts cover Black Rifle Coffee stock, we have to rely on the forecasts provided by the company. From 2019 to 2023, the company expects its revenue to grow 51 percent compounded annually. In 2023, Black Rifle Coffee expects revenue of $430.4 million and an adjusted EBIDTA of $15.1 million. The company expects its SAM (serviceable addressable market) to be worth more than $28 billion.
Is Black Rifle Coffee undervalued?
SBEA has assigned Black Rifle Coffee a pro forma implied equity value of $1.9 billion and an EV of $1.7 billion. Based on this, its EV-to-2021 sales multiple is 7.4x. The multiple for 2023 is 4.0x, which seems more reasonable. Black Rifle Coffee estimated the median 2023 multiple for high-growth food and beverage companies to be 6.5x.
Should you invest in Black Rifle Coffee Company
Black Rifle Coffee Company, which was founded in 2014, is a veteran founder and operated growing coffee company with a proven multi-channel growth strategy. Unlike many coffee outlets, Black Rifle Coffee Company has creative marketing. The company sells apparel and merchandise, along with its flagship firearm-themed coffee roast blends. Online sales account for most of the company's revenue. It also sells its products through large outlets like Walmart and has seven physical stores nationwide.
Black Rifle Coffee Company has a strong financial profile, specifically it is a “highly scalable platform that is gaining market share. In 2020, the direct-to-consumer subscriptions grew by 92% and the wholesale business grew by 182%. Its 2021 revenue is “estimated to grow approximately 40% to $230 million, with projected gross margins of approximately 40%.” Projected to grow sales by 35.4% in 2022 and 38.2% in 2023, some may believe it’s worth it to pay up for growth.
Overall, SBEA stock is a good buy based on attractive valuations and strong growth potential. But when it comes to investing in this pending SPAC deal, what the left or the right thinks about the company isn’t what should determine whether you buy it or avoid it. Instead, your top concern should be its rich valuation, which is built on ambitious growth targets. If the company can hit these targets, shares could potentially take off. If it falls short, expect SBEA stock to drop to single-digit prices in the years following its deSPACing.
How to buy Black Rifle (BRCC) stock?
For many beginner investors, using a brokerage, especially an online one, probably makes the most sense. Today, most brokerage offer fractional shares and commission-free, such as eToro and Robinhood.
