Energy drink company Celsius (NASDAQ:CELH) reported Q4 CY2024 results exceeding the market’s revenue expectations, but sales fell by 4.4% year on year to $332.2 million. Its non-GAAP profit of $0.14 per share was 44.2% above analysts’ consensus estimates.
Is now the time to buy Celsius? Find out by accessing our full research report, it’s free.
Celsius (CELH) Q4 CY2024 Highlights:
- Revenue: $332.2 million vs analyst estimates of $323.3 million (4.4% year-on-year decline, 2.7% beat)
- Adjusted EPS: $0.14 vs analyst estimates of $0.10 (44.2% beat)
- Adjusted EBITDA: $62.92 million vs analyst estimates of $41.05 million (18.9% margin, 53.3% beat)
- Operating Margin: -5.6%, down from 17% in the same quarter last year
- Market Capitalization: $6.13 billion
Company Overview
With its proprietary MetaPlus formula as the basis for key products, Celsius (NASDAQ:CELH) offers energy drinks that feature natural ingredients to help in fitness and weight management.
Beverages, Alcohol, and Tobacco
These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
With $1.36 billion in revenue over the past 12 months, Celsius is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers. On the other hand, it can grow faster because it’s working from a smaller revenue base and has a longer runway of untapped store chains to sell into.
As you can see below, Celsius’s 62.8% annualized revenue growth over the last three years was incredible. This is encouraging because it shows Celsius’s had strong demand, a helpful starting point.
This quarter, Celsius’s revenue fell by 4.4% year on year to $332.2 million but beat Wall Street’s estimates by 2.7%.
Looking ahead, sell-side analysts expect revenue to grow 12.8% over the next 12 months, a deceleration versus the last three years. Still, this projection is admirable and indicates the market sees success for its products.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Celsius has shown robust cash profitability, driven by its attractive business model that enables it to reinvest or return capital to investors. The company’s free cash flow margin averaged 12.5% over the last two years, quite impressive for a consumer staples business.
Key Takeaways from Celsius’s Q4 Results
We were impressed by how significantly Celsius blew past analysts’ EBITDA and EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates, suggesting the struggles surrounding its controversy with Pepsi, where it oversold inventory to the behemoth, could be approaching the rearview mirror. Separately, the company announced its acquisition of Alani Nu, a popular up-and-coming energy drink brand. Zooming out, we think this was a solid quarter. The stock traded up 23.6% to $31.53 immediately after reporting.
Indeed, Celsius had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
