Celsius (CELH): Buy, Sell, or Hold Post Q4 Earnings?
Celsius currently trades at $37.40 and has been a dream stock for shareholders. It's returned 2,456% since April 2020, blowing past the S&P 500's 86.9% gain. The company has also beaten the index over the past six months as its stock price is up 10.5% thanks to its solid quarterly results.
Is now still a good time to buy CELH? Or are investors being too optimistic? Find out in our full research report, it's free.
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.
A company's long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Celsius's sales grew at an incredible 62.8% compounded annual growth rate over the last three years. Its growth beat the average consumer staples company and shows its offerings resonate with customers.
Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Celsius's EPS grew at an astounding 260% compounded annual growth rate over the last three years, higher than its 62.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
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.
As you can see below, Celsius's margin expanded by 8.3 percentage points over the last year. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability fell. Celsius's free cash flow margin for the trailing 12 months was 17.7%.
These are just a few reasons why we're bullish on Celsius, and with its shares topping the market in recent months, the stock trades at 42.5× forward price-to-earnings (or $37.40 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it's free.
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