Shares of Celsius Holdings (CELH +3.65%) were on the rebound today, jumping after the company reported better-than-expected earnings results and said it would acquire Alani Nu, another energy drink maker, for $1.8 billion.
As of 10:39 a.m. ET on Friday, the stock was up 23.4% on the news.
Image source: Celsius Holdings.
Celsius has good news to share
Celsius rushed to get its earnings report out ahead of an upcoming conference, and now investors have a chance to see why.
The energy drink maker reported another quarter of declining sales as it copes with inventory corrections at PepsiCo, its distribution partner and minority shareholder, after Pepsi ordered too much inventory.
Revenue in the fourth quarter fell 4% to $332.2 million, beating the consensus at $327 million. The gross margin improved from 47.8% to 50.2%, a positive sign for the business, and adjusted earnings per share fell 18% to $0.14, but that topped estimates at $0.10.
The other major piece of news, which seemed to be the real driver of the stock pop today, was its $1.8 billion acquisition of Alani Nu, or a net price of $1.65 billion after factoring in $150 million in tax assets. At that price, Celsius is paying less than three times trailing revenue for the company and about 12 times trailing adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
Alani Nu is the fourth-largest energy drink maker and has a portfolio of shakes and snacks that should complement Celsius' product line well.
Combined, the two companies will have a 16% market share in the industry.
NASDAQ: CELH
Key Data Points
What's next for the Celsius
Ordinarily, Celsius stock might not have popped so high on the acquisition news, but its share price is beaten down after its challenges with the PepsiCo distribution deal.
Celsius continues to deliver strong growth at the retail level, up 22% last year, according to market researcher Circana.
The company didn't offer guidance, but if its revenue growth can eventually reflect that, the stock could move a lot higher.
