After massive declines in the second half of last year, Celsius Holdings (CELH 1.25%) stock may finally be ready for a comeback. The company's rapid growth came to a sudden halt (at least temporarily) as sluggish demand led one of its major distributors (likely PepsiCo) to dramatically scale back its orders.
The beverage stock is down over 60% since its peak in early 2024. Still, it is up over 50% since the beginning of the year. The question for investors is whether that recovery signifies the beginnings of a Celsius comeback, or whether investors need to stay on the sidelines.
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The state of Celsius stock
Celsius has carved out a compelling, lucrative niche within the energy drink industry. Instead of pursuing customers like its larger competitors, Red Bull and Monster Beverage, Celsius targeted fitness enthusiasts. It also participated in clinical studies to validate the health benefits of its beverages.
Celsius' beverages first became available in 2009. However, it was its distribution agreement with PepsiCo in August 2022 that helped sales take off. Since that agreement in the third quarter of 2022, quarterly revenues have increased by 75% even after the recent slowdown in sales. Additionally, that figure does not account for Celsius' takeover of Alani Nu, which occurred in the second quarter of this year.
Before that purchase, Celsius also claimed approximately 11% of the market share, putting it in third place in the energy drink market. Still, investors should remember that it leads the health and fitness-oriented niche in the market, which will likely make it a major force in this industry.
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Amid the stock's partial recovery, Celsius sells at a price-to-earnings (P/E) ratio of 127. Nonetheless, since it is recovering from last year's slump, the forward P/E ratio of 50 may better reflect the company's valuation, a level coming off historical lows. It is also well below the forward P/E ratio of 125 from the stock's peak in early 2024. That forward multiple arguably brings the stock price more in line with its current growth.
Celsius' mixed financial picture
Unfortunately, investors may still balk at Celsius' valuation as they brace for slower growth.
In the first quarter of 2025, revenue of $329 million dropped by 7% yearly. That's a dramatic improvement over the 31% decline in Q3. Still, it is well below the 102% revenue gain in 2023. The falling revenue also led to a comprehensive income in Q1 of $37 million, well below the $63 million in the year-ago quarter.
Revenue growth should improve in the near term due in part to the Alani Nu takeover. In 2025, analysts forecast 60% revenue growth. But once Celsius benefits from that one-time bump, they expect the revenue increase rate to slow to 21% in 2026.
Knowing that, the most significant hope for bulls may lie in the company's potential internationally, where 96% of the world's population resides. Even though international sales made up 7% of revenue in Q1 2025, that part of the market grew revenue by 41% annually.
Moreover, that revenue share was only 4% one year ago. Assuming it can continue to increase the proportion of international sales significantly, Celsius stock could deliver higher returns if revenue growth abroad remains strong.
Is Celsius stock a buy now?
Over the long term, Celsius stock likely remains a buy.
Admittedly, the 50 forward P/E ratio could point to some overvaluation in the near term. Furthermore, the immediate recovery in revenue will probably happen because of the buyout of Alani Nu, rather than an organic increase in Celsius brand products.
Nonetheless, the 21% forecasted revenue increase in 2026 is an indication that demand will rise over time. Additionally, even though international growth will take some time, sales outside of North America are likely to become the company's primary revenue driver over time.
Such potential indicates that Celsius' growth story is far from over, meaning its stock could still be positioned for huge gains.
