Vita Coco vs. Celsius: Why This Undervalued Beverage Stock Offers a More Sustainable and Profitable Bet for 2026

The beverage industry in 2026 is poised for transformation, driven by shifting consumer preferences toward health-conscious and functional drinks. Two stocks that have captured investor attention-Vita Coco (COCO) and Celsius Holdings (CELH)-represent divergent approaches to growth and valuation. While Celsius has leveraged aggressive acquisitions and high-growth bets to fuel explosive revenue gains, Vita Coco's disciplined focus on organic expansion, low debt, and a dominant position in the fast-growing coconut water market positions it as a more sustainable and profitable bet for value investors.

Financial Fundamentals: Stability vs. Volatility

Vita Coco's third-quarter 2025 results underscore its financial resilience. The company reported a 37% year-over-year revenue increase to $182 million, driven by 42% growth in coconut water sales. Net income rose to $24 million, or $0.40 per diluted share, with adjusted EBITDA climbing to $32 million. Despite a dip in gross margin to 38% due to tariffs and product costs, Vita Coco raised its full-year 2025 guidance, projecting $580–$595 million in sales and $90–$95 million in adjusted EBITDA.

In contrast, Celsius's Q3 2025 performance was marked by stark contrasts. While revenue surged 173% to $725.1 million-largely from the acquisition of Alani Nu and Rockstar Energy-the company posted a net loss of $61 million, or $(0.27) per share. Adjusted EBITDA, however, soared to $205.6 million, a 4,573% increase from 2024. This discrepancy highlights Celsius's reliance on non-GAAP metrics to mask underlying profitability challenges.

From a value investing lens, Vita Coco's conservative leverage (0% debt-to-equity) and cash reserves of $204 million provide a buffer against market volatility. Celsius, with a debt-to-equity ratio of 30.20%, faces higher financial risk, particularly as integration costs from recent acquisitions weigh on margins.

Valuation Metrics: Reasonable Premium vs. Overextension

Vita Coco's valuation appears more grounded in fundamentals. Its P/E ratio of 44.65 exceeds the global beverage average of 17.4x but remains significantly lower than Celsius's 146.84x according to competitor analysis. Similarly, Vita Coco's EV/EBITDA of 37.02 is far more attractive than Celsius's implied multiple, especially given Vita Coco's stronger cash flow generation. Free cash flow for Vita Coco stood at $52.9 million in Q3 2025 according to financial data, albeit down 26.7% year-over-year, while Celsius's free cash flow remains opaque amid its acquisition-driven growth.

Sector-Specific Tailwinds: Coconut Water's Explosive Growth

The global coconut water market is a key differentiator for Vita Coco. By 2026, the market is projected to reach $11.2 billion, expanding at a 16.8% CAGR since 2019. Vita Coco, the category leader, benefits from rising demand for natural hydration solutions and functional variants like electrolyte-infused products. Analysts note that Vita Coco's narrative fair value of $55.44 is close to its current price of $54.14, leaving little margin for error but aligning with its market leadership.

Celsius, meanwhile, operates in the broader functional beverage sector, which is expected to grow at a 7% CAGR from 2026 to 2035. While its Alani Nu brand has driven a 114% revenue increase in Q1 2026, the company's reliance on acquisitions and partnerships introduces execution risks. Moreover, Celsius's P/B ratio of 8.83 suggests investors are paying a premium for speculative growth, whereas Vita Coco's P/B of 4.22x reflects a more conservative valuation.

Strategic Positioning: Organic Growth vs. Acquisition-Driven Momentum

Vita Coco's strategy emphasizes organic expansion and product innovation. The company has diversified its offerings with flavors like pineapple-infused coconut water and invested in sustainable packaging, aligning with ESG trends. Its no-debt balance sheet allows flexibility to reinvest in growth without dilution or refinancing risks.

Celsius's growth, by contrast, hinges on integrating Alani Nu and Rockstar Energy into its portfolio. While these acquisitions expanded its retail sales by 31% year-over-year, they also created inventory headwinds and integration costs according to market analysis. The company's Q2 2026 performance will be critical to assess whether its growth is organic or merely a function of M&A activity.

Conclusion: A Value Investor's Choice

For investors prioritizing sustainability and profitability, Vita Coco offers a compelling case. Its strong cash position, low debt, and leadership in a high-growth niche provide a durable moat. While Celsius's aggressive expansion has driven revenue surges, its financial metrics and valuation multiples suggest overreach. As the coconut water market accelerates and functional beverages face margin pressures, Vita Coco's disciplined approach is likely to outperform in the long term.