To The Moon

$Celsius Holdings, Inc.(CELH)$

Celsius Holdings (NASDAQ: CELH) has been on a tear so far in 2025, with the stock price up over 41% year-to-date. Naturally, I’m thrilled with that performance, especially considering I rated the stock a Buy back in November 2024. However, after such a big move, and with growing macroeconomic uncertainties — including higher tariffs and the rising risk of recession — it’s critical to step back, re-evaluate the business fundamentals, assess the updated valuation, and determine whether Celsius stock still offers a favorable risk/reward profile from here.

Let’s take a deep dive.

A Look Back: How Celsius Got Here

The company’s journey this year hasn’t been entirely smooth. In February 2025, the stock experienced a bout of volatility, driven largely by broader market sell-offs and macro fears. But Celsius quickly regained its footing, thanks to strong operational performance and positive momentum from several key strategic initiatives.

The stock is now up over 41% year-to-date, reflecting investor optimism about the company’s prospects, as well as resilience amid a challenging economic backdrop.

Fundamentals Remain Strong

Celsius has been executing exceptionally well on multiple fronts.

Revenue Growth

The company’s trailing twelve-month revenue recently hit $1.356 billion, a huge milestone that highlights its tremendous growth over the past few years. Much of this growth has been organic, driven by increasing brand awareness, greater retail penetration, and the expanding health and wellness trend among consumers.

Additionally, Celsius has aggressively expanded its presence internationally, opening up major new markets and distribution channels outside of North America.

Strategic Acquisition: U.S. Manufacturing Facility

In an important strategic move, Celsius recently acquired a manufacturing facility located in the United States. This acquisition gives Celsius much greater control over its supply chain — an increasingly critical advantage in today’s uncertain geopolitical environment, where tariffs and manufacturing disruptions can impact companies heavily reliant on foreign production.

Owning domestic production capabilities not only insulates Celsius from some of these risks but also positions it favorably with U.S. policymakers and consumers who are placing a growing premium on "Made in America" products.

Operational Metrics Are Improving

From an operational standpoint, Celsius is hitting impressive benchmarks:

• Cash Flow from Operations to Sales: Now at 19.4%, showing the business is becoming more efficient at turning sales into cash.

• Return on Invested Capital (ROIC): Currently around 12% — lower than the company's historical highs but still solid. Historically, Celsius has delivered ROIC over 25%, and assuming continued execution and favorable macro conditions, it could return to those levels within 12–24 months.

• Cash and Liquidity: Over $93 million in cash and short-term investments, with no debt on the balance sheet, providing significant financial flexibility.

Strengthened Distribution Through PepsiCo

Celsius’s distribution partnership with PepsiCo remains one of its most critical competitive advantages.

Having Pepsi as a partner gives Celsius access to one of the world's most powerful distribution networks, dramatically expanding its reach into major retailers like Walmart and Costco.

Retailers, especially the big-box giants, are extremely careful about the brands they give shelf space to — poor-performing brands get quickly replaced. The backing of PepsiCo reassures these retailers that Celsius can supply product consistently, market effectively, and serve customers reliably.

This not only accelerates growth but also builds barriers to entry against potential competitors.

Updated Valuation: What Is Celsius Worth Today?

After updating my discounted cash flow (DCF) model, I estimate that the intrinsic value of Celsius stock is around $34.50 per share.

Here’s a summary of the key assumptions used in the model:

• Weighted Average Cost of Capital (WACC): 13.23%

• Cost of Equity: 14% (based on a beta of 1.58, a 4.5% risk-free rate, and a 6% market risk premium)

• Cost of Debt: 6.5%

• Target Capital Structure: 10% debt, 90% equity (even though Celsius currently has no debt, adding some low-cost leverage could lower their WACC over time)

At today's price near $37 per share, the stock appears fairly valued based on the DCF model.

Forward P/E Ratio Looks Attractive

Interestingly, when looking at the stock on a forward price-to-earnings (P/E) basis, Celsius is trading at about 32x forward earnings, which is near the cheapest valuation levels the stock has seen going back to 2022.

Considering Celsius’s growth rate, margins, and market opportunities, a forward P/E of 32 looks very reasonable — especially for a business that could sustain mid- to high-double-digit earnings growth over the next several years.

Risk Factors to Consider

While the fundamentals remain strong, investors should be aware of several risks:

• Macroeconomic Headwinds: Higher tariffs and a slowing global economy could weigh on consumer spending and slow Celsius’s growth.

• Competition: The energy drink market is highly competitive, with giants like Monster, Red Bull, and now Coca-Cola expanding their efforts.

• Execution Risk: As Celsius scales internationally, management must execute flawlessly to maintain margins and brand identity.

• Valuation Risk: Although not expensive, Celsius is still priced as a growth stock, which makes it vulnerable during periods of rising interest rates or economic slowdown.

This table outlines the key risks that Celsius faces as it continues to grow, including the potential impact of increased tariffs, supply chain challenges, and recession risks.

Big Picture: Why I'm Still Bullish on Celsius

Despite these risks, I believe the long-term investment thesis for Celsius remains intact. The energy drink market is growing rapidly, and Celsius is taking share, not just riding the wave. The company’s strong brand, premium positioning, loyal customer base, and improved operational leverage give it a clear path to further revenue and earnings growth.

The PepsiCo partnership and the acquisition of a domestic manufacturing facility are strategic moves that significantly derisk the growth story.

While short-term macro conditions could create some turbulence, over a 3–5 year horizon, Celsius still looks poised to deliver strong returns.

Final Verdict: Celsius Remains a Buy

Considering all factors — fundamentals, valuation, and risk/reward — I am maintaining my Buy rating on Celsius Holdings. I originally rated the stock a Buy on November 20, 2024, and after this re-evaluation in April 2025, I still see upside potential for patient, long-term investors.

Of course, it's important to size positions appropriately and be ready for some volatility, especially if the broader market remains shaky. But for those looking for a high-quality growth story in a rapidly expanding market, Celsius remains one of the most compelling names out there.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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