Celsius’s stock price has taken a beating over the past six months, shedding 25.5% of its value and falling to $30.11 per share. This might have investors contemplating their next move.
Following the drawdown, is this a buying opportunity for CELH? Find out in our full research report, it’s free.
Why Does CELH Stock Spark Debate?
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.
Two Things to Like:
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Celsius’s 56.1% annualized revenue growth over the last three years was incredible. Its growth beat the average consumer staples company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term 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 215% compounded annual growth rate over the last three years, higher than its 56.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
One Reason to be Careful:
Free Cash Flow Margin Dropping
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 dropped by 5.6 percentage points over the last year. If its declines continue, it could signal increasing investment needs and capital intensity. Celsius’s free cash flow margin for the trailing 12 months was 9.9%.
Final Judgment
Celsius’s positive characteristics outweigh the negatives. After the recent drawdown, the stock trades at 17.5× forward P/E (or $30.11 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.
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