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After Celsius reported its November results, we updated our fair value and cut our quality score to 2.6. We changed our rating to Watch and lowered our assessment of how well protected the business is from competitors. We have added the risk of internal management instability and the possibility that the company's different drink brands are competing for the same customers to what we track. We also cut our growth projections for the Alani Nu brand and the core Celsius brand after sales of the namesake drink fell 6% over the past three months.
Celsius reported a strong quarter with about $847 million in revenue, topping the $800 million analysts expected. While the core North American business grew a steady 15 percent, the real standout was international sales, which jumped 78 percent to $41 million. This suggests the brand is successfully finding an audience outside its home market, a key step in proving it can be more than just a U.S. success story.
Profitability also improved, with earnings of $0.41 per share coming in well ahead of the $0.34 expected. However, gross margin, the percentage of sales left after paying for ingredients and manufacturing, fell to about 47 percent from 51 percent a year ago. This squeeze is likely due to the costs of integrating new brands like Alani Nu, but the overall growth in sales and profit shows the company is managing its larger portfolio effectively.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Celsius is moving to a new organizational structure that focuses on its specific brands rather than a single unified team. This change is designed to help the company grow its newer additions, Alani Nu and Rockstar, without losing focus on the original Celsius line.
For a long-term owner, this is a logical step as the company evolves from a single-product business into a multi-brand house. By giving each brand its own leadership and strategy, Celsius aims to reach different types of customers more effectively while still using the massive PepsiCo distribution network to get cans onto shelves.
Source: Business Wire
The firm set a target that is significantly higher than the $42 average among other analysts. This suggests a much more optimistic view of how quickly the company can grow its share of the energy drink market through its partnership with PepsiCo.
While a price target is just an estimate, this specific call implies the business is worth almost twice its current market price. It signals confidence that the recent acquisitions of Alani Nu and Rockstar will pay off more than the rest of the market currently expects.
Source: B.Riley Financial
A new federal lawsuit accuses Celsius of using false claims to sell its energy drinks. The suit argues the company misleads people by saying its products can speed up metabolism and burn body fat, a practice the filing calls health-washing.
This is a direct challenge to the core marketing that helped Celsius stand out from traditional energy drinks. While lawsuits like this are common for food and drink companies, it is worth watching because the brand's identity is built on being a functional fitness drink rather than just a source of caffeine. If the company is forced to change its labels or marketing, it could lose some of the unique appeal that has driven its fast growth.
Source: New York Post
Management consistently sets a bar they can clear, beating profit targets in six of the last eight quarters. This suggests a business that is still outrunning its own internal forecasts.
| Expectation | |
|---|---|
| EPS | $0.30 |
| Revenue | $768M |
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