Celsius: A Temporary Respite

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The market, as it often does, discarded Celsius Holdings (CELH 0.35%) as if it were refuse. A mistake, though one easily understood. Sentiment, after all, is a far simpler calculation than value. The share price has, in the last year, doubled – a nearly 100% increase – spurred by results released this week. It is a recovery, but one built on a foundation that warrants closer inspection.

The catalyst is not difficult to discern. Fifty-three weeks ago, Celsius announced the acquisition of Alani Nu. A price of $1.65 billion. At the time, Celsius was experiencing a decline in sales, its third consecutive quarter. Alani Nu offered a smaller, but potentially ascending, brand, aimed at a distinct demographic. The transaction, viewed charitably, was a gamble on arrested decline.

The price appeared…favorable. Celsius purchased Alani Nu for three times trailing sales and twelve times EBITDA, adjusted for anticipated cost synergies. The seller, meanwhile, was valued at 4.4 times sales and 37 times EBITDA. This occurred while Celsius itself traded well below its previous year’s high. It was, in essence, a distressed asset purchase, cloaked in the language of strategic growth. A shrewd move, perhaps, but one that should have raised questions about the underlying health of the acquired entity.

The Business of Effervescence

The latest quarterly report confirms that the Alani Nu acquisition may prove to be the most successful transaction of the year. The deal closed at the start of the second quarter, and Celsius’s subsequent quarterly revenue growth has been substantial: 84%, 173%, and now 117%.

Naturally, this performance is inflated by the inclusion of Alani Nu’s revenue over the past nine months. However, even a closer examination reveals a significant contribution. Alani Nu generated roughly $500 million in sales in 2024. Of the $2.5 billion in revenue Celsius reported for 2025, $1 billion came from Alani Nu in the final three quarters. Annualized, Alani Nu’s sales exceed $1.3 billion. Celsius paid less than 1.3 times forward sales – a price that, while attractive, demands scrutiny of Alani Nu’s future prospects.

The acquisition of U.S. and Canada rights to Rockstar Energy – a concession from PepsiCo following an increased stake and expanded distribution agreement – added another $55 million in revenue. Even the Celsius flagship brand, which had been in decline, has shown a modest recovery, with sales rising 8% to $1.5 billion for all of 2025.

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Avoiding Flatness, Again

Celsius appears to have one more quarter of exceptional growth before returning to more organic increases in April. The landing, if it occurs, should be relatively soft. Alani Nu continues to expand, and the flagship brand has stabilized. However, to assume continued momentum is to ignore the cyclical nature of consumer preferences and the inherent volatility of the beverage market.

Profitability has been another unexpected boon for investors. The favorable terms of the Alani Nu acquisition – likely predicated on the target company’s previous struggles – allowed Celsius to secure a bargain. The initial price tag was reduced by $150 million due to a tax benefit. The combined entity is now performing well, with adjusted earnings nearly doubling to $1.34 per share for all of 2025.

Since closing the Alani Nu acquisition, Celsius has exceeded earnings expectations by 93%, 52%, and 37% in the subsequent quarters. While full guidance for 2026 has not been provided, momentum remains strong. The company highlights continued growth in shelf space for Alani Nu and a 17% increase in space gains for the flagship brand. New rollouts and limited-time offerings are also being used to engage with its growing customer base. These are standard marketing tactics, not evidence of a fundamental shift in consumer loyalty.

Analysts have raised their price targets following the latest quarterly performance, now expecting adjusted earnings of $1.84 per share this year, up from $1.55 earlier in the week. Despite the nearly doubled share price, the stock trades at less than 30 times forward earnings – an attractive valuation, provided the current growth trajectory continues. The question, of course, is whether it will.

In a market saturated with slow-growth beverage stocks, Celsius is demonstrating a degree of vitality. With a pair of $1 billion brands and potential for domestic and international expansion, it is not merely the beverages that are sparkling. However, investors should remember that bubbles, by their very nature, are ephemeral.

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2026-02-27 20:12