Celsius Holdings: Is the Forward P/E Ratio Justifying Its Growth Story?

Celsius Holdings (NASDAQ: CELH) has long been a polarizing stock, oscillating between explosive growth and regulatory scrutiny. As of June 2025, its valuation metrics offer a fresh lens to evaluate whether the company's forward momentum can justify its current price tag. With a forward price-to-earnings (P/E) ratio of 50.92, down sharply from its 2024 peak but still elevated compared to peers, investors must weigh its growth potential against its valuation.

The Forward P/E: A Mixed Signal

The forward P/E of 50.92, calculated using analysts' 2025 EPS estimates of $0.84 and a June 26 stock price of $45.42, reflects a market pricing in significant growth. This figure is nearly double the S&P 500's average forward P/E of 26.2, but it's a 65% decline from its early 2024 peak of over 140. For context, Coca-Cola (KO) and PepsiCo (PEP) trade at forward P/E ratios of 25.4 and 21.9, respectively.

The forward P/E's drop aligns with improved earnings visibility. Analysts now project 18% revenue growth in 2025 and a staggering 40% in 2026, driven by the acquisition of Alani Nu and international expansion. Yet, the trailing P/E of 139.83 underscores that recent earnings have lagged behind these expectations—Q1 2025 net income fell 43% year-over-year to $44.4 million.

Growth Drivers: Alani Nu and Global Ambitions

The $1.3 billion acquisition of Alani Nu in April 使2025 is the linchpin of Celsius' growth story. Alani Nu, a fast-growing energy drink brand, added over $1 billion in trailing retail sales and a 5.3% U.S. market share. Combined with Celsius' own 10.9% share, the duo now commands 16.2% of the U.S. energy drink market, up 0.8% year-over-year.

Internationally, Celsius is making strides. Q1 2025 international revenue surged 41% to $22.8 million, with new markets like the UK and France showing promise. Legacy markets like Sweden and Finland also saw gains, while the company plans to expand further into Asia. This geographic diversification reduces reliance on the U.S., where retail sales dipped 3% year-over-year.

Risks and Reality Checks

Optimism hinges on execution. The Q1 earnings report highlighted declining U.S. distributor incentives and rising promotional costs, which weighed on margins. Gross margins improved to 52.3%, but net income's drop underscores the challenges of scaling. Additionally, the energy drink market is fiercely competitive, with Red Bull and Monster Energy dominating.

The stock's 70% year-to-date gain (as of June 2025) has not erased its scars: it remains 55% below its 2024 peak of $61.25. A sustained recovery will require consistent earnings growth and market share gains, especially as the company integrates Alani Nu's operations.

Is the Valuation Worth It?

At 50.92x forward earnings, Celsius is not cheap. However, the stock's 3-year average forward P/E of 192.20 and 5-year average of 258.40 suggest today's valuation is far more reasonable by historical standards. If analysts' 2026 EPS forecast of $1.17 materializes, the forward P/E could drop to 38.8, narrowing the gap with peers.

Investors should also consider cash reserves: Celsius held $977 million in cash as of March 2025, providing a cushion for innovation and acquisitions. The company's adjusted EBITDA margins of 21.2% in Q1 (down from 24.7% in 2024) hint at margin pressures but remain robust for a consumer goods firm.

Investment Takeaway

Celsius Holdings is a high-risk, high-reward bet on the energy drink market's growth. The forward P/E is justified only if the company executes flawlessly on its Alani Nu integration, international expansion, and margin improvements.

• Bull Case: If earnings hit 2026 targets, the stock could climb toward its 2024 highs, rewarding long-term holders.
• Bear Case: A stumble in execution or a slowdown in energy drink demand could push the stock back down.

For now, the 50.92 forward P/E seems a fair price for investors who believe in Celsius' ability to capitalize on its dual-brand strategy and global footprint. However, the stock's volatility demands a long-term horizon and tolerance for setbacks.

Historically, a strategy of buying CELH on the announcement of positive quarterly earnings beats and holding for 20 trading days has produced striking results. From 2020 to 2025, such a strategy yielded an average return of 245.93%, underscoring the market's strong response to positive earnings news. However, this came with significant volatility, including a maximum drawdown of -33.71% and a Sharpe ratio of 0.84, reflecting the high risk inherent in earnings-driven trades. This historical performance supports the high-risk, high-reward profile of Celsius, where timely execution and market sentiment play critical roles.

In conclusion, Celsius' valuation is a barometer of its future success. While risks abound, the company's growth narrative remains compelling—if it can deliver.

Disclaimer: This analysis is for informational purposes only and should not be construed as investment advice. Past performance does not guarantee future results.