Is CELH Stock Gearing Up to Be the Next Monster Beverage After Earnings Pop?

Today, shares of Celsius (NASDAQ:CELH) are trading 1% higher after reporting earnings for Q3 pre-market. However, CELH stock traded as much as 14% higher before the market opened. The energy drink company reported revenue of $94.9 million, up 157% year-over-year (YoY). The revenue figure beat estimates of $75 million by 26%.

three energy drinks contrasted against a white background
Source: Shutterstock

The performance of CELH stock has elicited comparisons to Monster Beverage (NASDAQ:MNST). Monster derives a majority of its sales from its flagship Monster energy drink product and owns other energy drink brands like BURN and Full Throttle. MNST stock is famously known for returning over 70,000% since its initial public offering (IPO) in 1985, making it the one of the best performing stocks in the whole market. Who would’ve guessed a drink in an aluminum can could outperform tech giants like Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL)?

In comparison, CELH stock has returned 99% since its IPO in 2006. However, it’s worth noting that Celsius IPO’d at an extremely high valuation and subsequently plummeted after coming public. During the past five years, CELH stock has returned a whopping 4,400%.

Let’s dive into some highlights from Celsius’ Q3 earnings.

CELH Stock: Q3 Financial Highlights

  • Celsius reported gross profits of $37.7 million, up 115% YoY. However, gross profit margins were 39.7%, down from 47.6% YoY.
  • Net income was $2.7 million, down 44% YoY. But domestic revenue was $84.5 million, up 214% YoY, and international revenue was $10.4 million, up 5% YoY.
  • Additionally, Celsius expanded operations into Germany and the United Kingdom in Q3.
  • The company also grew convenience store locations by 72% year-to-date (YTD). Since the beginning of 2021, 20,000 convenience stores have added Celsius to their shelves.
  • Furthermore, total U.S. store counts grew to 118,000 during Q3, up 48% YTD.
  • While cost of sales increased, the company had good reasoning: “Importing aluminum cans and increased output costs including shipping, freight, and packaging materials resulted in the increased cost of sales which are likely to be transitory.”
  • Celsius was the second most popular energy drink on Amazon (NASDAQ:AMZN). Monster was number one, and Red Bull was number three.

What Is the Outlook for Celsius?

Celsius is firing on all cylinders, as apparent by its explosive revenue growth and expansion into convenience stores and stores in general. Shelf space in stores and selling online makes up a majority of the company’s sales; Celsius delivered by massively upping sales in both categories.

On the other hand, international revenue growth grew slowly at 5% YoY as Celsius works to establish brand power and consumer loyalty internationally. Supply chain headwinds punished gross margins and net income during Q3, but the company stated that these increased costs should be transitory in nature.

Ultimately, I see CELH stock as a growth story in progress that may deliver Monster Beverage-like returns in the future.

On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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