Should Investors Buy CELH or Wait as Growth Outruns Profitability?

Celsius Holdings, Inc. CELH is still expanding rapidly, but growth is no longer translating cleanly into stronger earnings. Second-quarter revenues rose 10.6% year over year to $817.9 million, while adjusted earnings fell 23% to 36 cents per share.

That divergence makes the investment case more selective. Alani Nu is adding scale and distribution runway, but weakness in the core CELSIUS brand, margin pressure and falling earnings estimates argue against treating revenue growth alone as a buy signal.

Why CELH Growth Is Not Yet a Clean Buy Signal

The enlarged portfolio is producing higher revenues, helped by Alani Nu and Rockstar. Yet adjusted EBITDA declined 12% year over year to $184.2 million, showing that portfolio expansion has not prevented pressure on operating profitability.

The near-term earnings backdrop has also weakened. The Zacks Consensus Estimate for current-year earnings has moved 5.2% lower over the past four weeks, adding an expectations risk that offsets part of the top-line growth story.

Alani Nu Gives CELH a Stronger Growth Engine

Alani Nu generated about $364.4 million in second-quarter revenues, up roughly 21% year over year. Tracked-channel retail sales climbed 55.7%, supported by innovation, broader distribution and continued consumer adoption.

The brand remains underpenetrated in channels where Celsius already has portfolio reach, leaving room for further expansion. Monster Beverage Corporation MNST is a relevant industry benchmark, with its Monster Energy Drinks segment posting 27.6% net-sales growth in the first quarter of 2026.

Core Celsius Weakness Keeps Execution Risk Elevated

CELSIUS brand revenues fell about 11.7% in the second quarter, while tracked-channel retail sales declined 2%. U.S. ready-to-drink energy dollar share was about 9.5%, down from roughly 9.9% in the first quarter.

SKU rationalization reduced distribution points before targeted shelf gains were fully installed, while limited innovation and inventory rebalancing added pressure. PepsiCo, Inc. PEP remains central to execution because its direct-store-delivery system distributes CELSIUS, Alani Nu and Rockstar in the United States.

CELH Margins Face Promotion and Commodity Pressure

Gross margin fell 340 basis points year over year to 48.1%. Higher promotional activity and direct-store-delivery mix weighed on profitability, while aluminum and fuel costs offset benefits from freight optimization and acquisition integration.

Management expects third-quarter gross margin to remain in the high 40s at current diesel and aluminum levels. Manufacturing expansion, direct sourcing and price-pack architecture may help over time, but commodity inflation and trade spending could continue absorbing savings.

CELH Valuation Leaves Less Room for Execution Misses

CELH trades at 2.05X forward 12-month sales versus 0.81X for its Zacks sub-industry. The multiple is well below the stock's five-year median of 6.64X, but the relative premium still requires investors to weigh growth against execution risk.

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Projected current-year sales growth is 29.1%, while projected earnings growth is 12.7%. That spread reinforces the central concern: sales are expanding much faster than profits, making margin recovery increasingly important to the valuation case.

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CELH Signals Favor Patience Despite Strong Growth

The bottom line favors patience rather than an aggressive entry. Celsius has a credible growth engine in Alani Nu and longer-term opportunities in innovation and international expansion, but core-brand weakness and margin pressure remain unresolved.

CELH currently carries a Zacks Rank #5 (Strong Sell), along with a Growth Score of A, Momentum Score of B, Value Score of D and VGM Score of B. The favorable growth and momentum characteristics do not override the Rank signal; Zacks methodology gives greater weight to earnings-estimate revisions, making the current setup better suited to waiting for clearer operating and estimate improvement.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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