Today, Celsius Holdings Inc (CELH, Financial) experienced a notable daily loss of 12.7%, yet it boasts a three-month gain of 48.56%. With an Earnings Per Share (EPS) of 0.91, investors are keen to understand: is Celsius Holdings fairly valued? This analysis delves into the company's valuation, providing insights into whether its current market price reflects its intrinsic worth.
Company Overview
Celsius Holdings operates in the energy drink segment of the non-alcoholic beverage market, primarily in North America, where it generates 96% of its revenue. The company is known for its natural ingredients and metabolism-enhancing products, catering to those with an active lifestyle. In 2022, Celsius Holdings secured a 20-year distribution deal with PepsiCo, which now holds an 8.5% stake in the company. With a current stock price of $83.07 and a market cap of $19.40 billion, understanding its fair value through the GF Value, set at $89.79, is crucial for potential investors.
Understanding GF Value
The GF Value is a proprietary measure reflecting the true value of a stock, based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. For Celsius Holdings, the GF Value suggests the stock is fairly valued, indicating that the stock price should ideally hover around this value. If the price strays significantly higher, it might suggest an overvaluation, leading to potentially poorer future returns. Conversely, a price well below the GF Value could point to undervaluation, suggesting higher future returns.
Financial Strength and Stability
Assessing the financial strength of Celsius Holdings is essential to avoid the risk of capital loss. The company boasts a strong cash-to-debt ratio of 444.87, ranking better than 91.67% of its peers in the industry. This solid financial foundation is reflected in its financial strength rating of 8 out of 10.
Profitability and Growth Perspectives
Profitability is a critical factor for long-term investment success. Celsius Holdings has maintained profitability over the past four years, with a notable operating margin of 21.55%, surpassing 86.36% of its competitors. The company's exceptional revenue growth rate of 111.8% annually positions it well above 97.12% of its industry peers. Such robust growth metrics suggest a promising outlook for value creation.
Moreover, the company's Return on Invested Capital (ROIC) is significantly higher than its Weighted Average Cost of Capital (WACC), indicating efficient management and profitable investment returns. This is visually represented in the historical comparison of ROIC vs. WACC.
Conclusion
In conclusion, Celsius Holdings (CELH, Financial) appears to be fairly valued at its current market price, reflecting its strong financial health and significant growth potential. For investors seeking more detailed financial data, the company's 30-Year Financials are available for review.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
