In the volatile world of investing, Celsius Holdings Inc (CELH, Financial) has recently experienced a daily loss of -3.16%, despite a 3-month gain of 36.32%. With a reported Loss Per Share of 1.91, investors may wonder if the stock is modestly undervalued. This article aims to answer this question by providing an in-depth analysis of Celsius Holdings' valuation. Read on for a comprehensive exploration of the company's financial health, profitability, and growth.
Introducing Celsius Holdings Inc
Celsius Holdings Inc, a company that specializes in the development, marketing, sale, and distribution of functional calorie-burning beverages, has been a player in the beverage industry for several years. Offering a variety of flavors under the Celsius brand, the company distributes its products to a range of retailers, including supermarkets, convenience stores, drug stores, nutritional stores, and e-commerce websites. With its current stock price at $191.64 and a market cap of $14.70 billion, the company's GF Value stands at $215.88, suggesting that the stock is modestly undervalued.
Understanding the GF Value of Celsius Holdings
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on historical multiples, a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of the business performance. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. In the case of Celsius Holdings, the GF Value suggests that the stock is modestly undervalued, indicating that the long-term return of its stock is likely to be higher than its business growth.
Assessing the Financial Strength of Celsius Holdings
Investors must review a company's financial strength to avoid the risk of permanent capital loss. Factors such as the cash-to-debt ratio and interest coverage can provide insights into the company's financial strength. For Celsius Holdings, the cash-to-debt ratio is 703.57, which ranks better than 92.38% of companies in the Beverages - Non-Alcoholic industry. The overall financial strength of Celsius Holdings is 8 out of 10, indicating strong financial health.
Evaluating the Profitability and Growth of Celsius Holdings
Consistent profitability over the long term can reduce the risk for investors. With an operating margin of -7.42%, Celsius Holdings' profitability is ranked 4 out of 10, indicating poor profitability. However, the company's 3-year average annual revenue growth of 94.7% ranks better than 97.92% of companies in the Beverages - Non-Alcoholic industry, suggesting strong growth.
Comparing ROIC and WACC
Comparing a company's return on invested capital (ROIC) with its weighted cost of capital (WACC) can provide insights into its profitability. Over the past 12 months, Celsius Holdings' ROIC was -31.4, while its WACC came in at 13.94.
Conclusion
In conclusion, Celsius Holdings appears to be modestly undervalued. Despite its poor profitability, the company's strong financial condition and growth prospects make it an attractive investment. For a more detailed look at Celsius Holdings' financials, check out its 30-Year Financials here.
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