Celsius (CELH)

Energy drink company Celsius (NASDAQ:CELH) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 173% year on year to $725.1 million. Its non-GAAP profit of $0.42 per share was 49.7% above analysts’ consensus estimates.

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.

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.

Competitors that offer energy drinks or alternatives to energy drinks include Monster Beverage (NASDAQ:MNST), Rockstar Energy from PepsiCo (NASDAQ:PEP), and Coca-Cola Energy and Full Throttle from Coca-Cola (NYSE:KO).

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $2.13 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 bright side, it can grow faster because it has a longer list of untapped store chains to sell into.

As you can see below, Celsius’s sales grew at an incredible 54.2% compounded annual growth rate over the last three years. This is a great starting point for our analysis because it shows Celsius’s demand was higher than many consumer staples companies.

This quarter, Celsius reported magnificent year-on-year revenue growth of 173%, and its $725.1 million of revenue beat Wall Street’s estimates by 1.2%.

Looking ahead, sell-side analysts expect revenue to grow 49.9% over the next 12 months, a deceleration versus the last three years. Still, this projection is admirable and indicates the market is forecasting success for its products.

At StockStory, we prefer high gross margin businesses because they indicate pricing power or differentiated products, giving the company a chance to generate higher operating profits.

Celsius has great unit economics for a consumer staples company, giving it ample room to invest in areas such as marketing and talent to grow its brand. As you can see below, it averaged an excellent 50.7% gross margin over the last two years. That means Celsius only paid its suppliers $49.33 for every $100 in revenue.

Celsius produced a 51.3% gross profit margin in Q3, marking a 5.3 percentage point increase from 46% in the same quarter last year. Celsius’s full-year margin has also been trending up over the past 12 months, increasing by 1.8 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Celsius has managed its cost base well over the last two years. It demonstrated solid profitability for a consumer staples business, producing an average operating margin of 11.5%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Celsius’s operating margin decreased by 9.1 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q3, Celsius generated an operating margin profit margin of negative 11%, down 9.8 percentage points year on year. Conversely, its revenue and gross margin actually rose, so we can assume it was less efficient because its operating expenses like marketing, and administrative overhead grew faster than its revenue.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

In Q3, Celsius reported adjusted EPS of $0.42, up from negative $0 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Celsius’s full-year EPS of $1.21 to grow 17.6%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Celsius has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the consumer staples sector, averaging 13.4% over the last two years.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Celsius’s five-year average ROIC was 31.7%, placing it among the best consumer staples companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

Celsius reported $806 million of cash and $861.5 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $548.5 million of EBITDA over the last 12 months, we view Celsius’s 0.1× net-debt-to-EBITDA ratio as safe. We also see its $16.58 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Celsius beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. Investors were likely hoping for more, and shares traded down 12.2% to $52.60 immediately after reporting.

Updated: November 25, 2025 at 10:14 PM EST

When considering an investment in Celsius, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

In our opinion, Celsius is a solid company. First off, its revenue growth was exceptional over the last three years. And while its declining operating margin shows the business has become less efficient, its powerful free cash flow generation enables it to stay ahead of the competition through consistent reinvestment of profits. On top of that, its EPS growth over the last three years has been fantastic.

Celsius’s P/E ratio based on the next 12 months is 26.4x. At this valuation, there’s a lot of good news priced in. Add this one to your watchlist and come back to it later.

Wall Street analysts have a consensus one-year price target of $64.52 on the company (compared to the current share price of $40.58).