current developments surrounding Celsius Holdings' (CELH) share price
Celsius Holdings, the energy drink giant with ticker symbol CELH on NASDAQ, recently blew past quarterly expectations with earnings of $0.14 per share on sales of $332 million. That's a significant leap from the consensus estimates of $0.10 and $327 million, respectively. The company also revealed plans to purchase Alani Nu, a well-known player in the wellness space with energy drinks, supplements, snacks, and other lifestyle products. Celsius is shelling out a whopping $1.65 billion for Alani Nu, which translates to a 2.8x revenue multiple. Unsurprisingly, CELH stock soared 35% in after-hours trading following the acquisition news.
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So, how did Celsius fare in Q4? Revenue took a slight dip to $332 million, primarily due to increased distributor incentives and higher domestic allowances. North American sales dropped 6% to $312 million while international sales grew a solid 39% to $20 million. In U.S. retail outlets, Celsius saw a 2% sales increase, though their dollar share shrank by 0.5%. Gross margin expanded by 240 basis points to 50.2%, while adjusted EBITDA margin saw a modest bump, increasing by 10 basis points to 18.9%. Adjusted earnings per share also dipped 18% year over year.
Looking ahead, the Alani Nu acquisition is expected to propel Celsius' market share and boost combined sales to beyond $2 billion. The company also aims to snag $50 million in synergies within two years.
But what does this mean for CELH stock? Volatility has been a constant companion for the energy drink company over the years. In 2024 alone, its stock returned -53%, significantly underperforming the S&P 500, which climbed 28%. A drop in market share last year was a major contributor to this slump.
However, with its valuation currently at 6x sales, Celsius seems poised for growth, surpassing its three-year historical average of 9x. The company's solid Q4 performance, improved profit margins, and the strategic Alani Nu acquisition bolster this belief.
Investors seem to agree, with the stock jumping 35% on the news of the Alani Nu acquisition. But will this upward trend continue, or will CELH end up underperforming the S&P 500 over the next year? Time will tell, but the company's commitment to innovation, branding, and marketing could be key factors influencing its performance.
Sources:[1] Seeking Alpha[2] Investing Pro[3] MarketWatch[4] Yahoo Finance[5] CNBC
- The announced acquisition of Alani Nu, a wellness brand known for energy drinks and supplements, by Celsius Holdings, valued at a 2.8x revenue multiple, is expected to boost Celsius's revenue to beyond $2 billion.
- The agreement to purchase Alani Nu, which also offers snacks and other lifestyle products, will allow Celsius to potentialize $50 million in synergies within two years.
- Despite a slight revenue dip in Q4, attributed to increased distributor incentives and higher domestic allowances, Celsius's adjusted earnings per share dipped 18% year over year, but its valuation currently sits at 6x sales, indicating potential growth.
- Celsius's recent Q4 performance, including a 240 basis points expansion in gross margin and a 10 basis points increase in adjusted EBITDA margin, alongside the strategic Alani Nu acquisition, underscores the company's commitment to improving profitability.
- Alani Nu, with its energy drink line and other wellness products, will contribute to Celsius Holdings' revenue and market share, as the company continues to focus on innovation, branding, and marketing.
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