CELH - Celsius Holdings: Lofty Valuation Wait For Pullback

2024-04-03 04:07:18 ET

Summary

• Revenue surged 104% YoY to $970 million, with gross profit growing faster at 143%, leading to a gross margin increase from 40% to 48%.
• Celsius Holdings' financials show impressive revenue and gross profit growth, with strong operating leverage and reduced expenses.
• Projected 32% revenue CAGR in the next 3 years through continued expansion, strong branding, international market expansion, and industry momentum towards healthier drink options.
• Celsius has solidified its position in the market but faces a lofty valuation, prompting caution and patience from investors.
• In my view, a fair forward FY27 multiple to pay would be 4.5x to 5.0x.

Investment Thesis

Since my last publication in Dec 2022 , Celsius Holdings (CELH) share price has risen by over 100%. I acknowledged its incredible growth and market share expansion back then but voiced my concern about its premium valuation. I was unsure how long the company would maintain its growth to justify its valuation. I underestimated its ability to maintain its growth, and ultimately, the management’s execution proved me wrong. This prompted me to look at the company again. Although, in hindsight, I don't think my concerns were invalid....

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