Shares of Dutch brothers (NYSE: BROS)the coffee chain known for its drive-thru business model, suffered a slump today after reporting solid second-quarter results. However, slowing new-store growth clouded otherwise strong results.

At 1:20 p.m. ET, the stock was up 20.8%.

Dutch Bros reported strong results

Dutch Bros achieved good results in the second quarter: sales in existing stores increased by 4.1 percent, total sales increased by 30 percent to $324.9 million, exceeding analyst estimates of $317.1 million.

Margins continued to improve as company-owned business contribution margin increased 50 basis points to 30.8% and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 34.1% to $65.2 million.

The bottom line was that adjusted earnings per share improved from $0.13 to $0.19, above the consensus of $0.13.

CEO Christine Barone said: “Our quarterly performance shows that Dutch Bros still has a lot of work to do as we once again delivered strong revenue and profit growth.” She also pointed to the benefits of the Dutch Rewards program, where 67% of transactions come from rewards members.

Branch growth slows down

Dutch Bros also raised its full-year guidance. The company now expects revenue of $1.22 billion to $1.23 billion, up from $1.20 billion to $1.22 billion. It also expects revenue to be in the low single digits and raised its adjusted EBITDA guidance to $200 million to $210 million, up from $195 million to $205 million.

However, the company now expects the number of new openings to be at the lower end of the previously mentioned range of 150 to 165, which could slow growth slightly in the coming years.

This seemed to be the only weak spot in the earnings report, but after the report, the stock became expensive at a price-to-earnings ratio of 64, leading to the sell-off. Still, the sell-off seems overdone after otherwise strong results. If you’re bullish on Dutch Bros, this looks like a good buying opportunity.

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Jeremy Bowman does not own any stocks mentioned. The Motley Fool does not own any stocks mentioned. The Motley Fool has a disclosure policy.

Why Dutch Bros stock fell today was originally published by The Motley Fool.