Celsius Holdings Inc. (CELH): Reenergizing Growth through International Expansion
AInvestMonday, Jan 22, 2024 4:20 pm ET
2min read
CELH --

Celsius Holdings Inc. (CELH), a leading energy drink manufacturer, is reenergizing its growth and international expansion plans, targeting new markets across Canada, the U.K., and Ireland. The company, known for its CELSIUS Originals and CELSIUS HEAT energy drinks, has already proven its dominance within the U.S. market and is now aiming to maintain its impressive growth through overseas expansion.

In the past two years, CELH has posted growth rates of over 100% year-over-year in all but three quarters, with the lightest growth period reaching 70.7%. The company's most recent quarter saw a doubling of its top line year-over-year, driven by unwavering growth across all channels, particularly within the club retail channel.

CELH's international exposure is currently tiny, comprising only 4% of Q3 revenue, but it has grown nicely. The partnership with PepsiCo (PEP) is highly attractive for CELH, as it can leverage the beverage and snack food giant's distribution expertise to facilitate a more aggressive overseas expansion.

CELH plans to target Canada as its first international market under the PEP umbrella, with a handful of additional countries to be rolled out throughout the year. The company aims to build upon this momentum over the next several years.

While CELH has done a stellar job taking its slice of the energy drink pie in the U.S., it faces competition from established brands like Monster Beverage (MNST) and names under the Coca-Cola (KO) and PEP banners. CELH will need to pour additional capital into developing specific flavors for each market, but the challenge is not insurmountable, especially with PEP's support.

CELH's ambitious overseas plans may come with their share of hiccups, but the company is well-positioned to make that leap. The past year has been the ultimate test for many beverage makers attempting to expand into international markets, and CELH is confident in its ability to succeed.

CELH trades at a market cap of $12.05B and an enterprise value of $12.12B. The company's forward P/E ratio is 45.45, which is above the current forward P/E for the S&P 500 of 18.7. CELH is positioned primarily in the Consumer Defensive sector, which trades at a 24.47 price-to-earnings ratio on a trailing twelve-month basis. At a TTM P/E of 108.35, CELH is more expensive than its peers in the sector.

Wall Street analysts rate CELH as a Strong Buy, with an average rating based on 14 analysts. The stock has demonstrated impressive growth and has the potential to continue its upward trajectory as it expands into new markets and capitalizes on the growing demand for fitness energy drinks.

In conclusion, CELH is poised to reenergize its growth and international expansion with the support of its partnership with PepsiCo and its focus on the fitness energy drink market. Investors should keep an eye on CELH as it continues to make inroads into new markets and solidifies its position as a leading player in the energy drink industry.

$CELH(CELH)

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