Celsius Holdings, Inc. (NASDAQ:CELH) now controls three prominent energy-drink brands, but its valuation increasingly depends on something less visible than shelf space: how much of that portfolio’s growth reaches shareholders as earnings. The company’s August second-quarter results showed the contradiction. Revenue rose 11% to approximately $818 million, helped by Alani Nu and Rockstar, while the flagship CELSIUS brand contracted and adjusted EBITDA fell. Expanding distribution can create scale, but promotions, input costs, and integration decisions can also consume the incremental profit.
The comparison with other discounted companies is instructive. Celsius Holdings, Inc. ranks ninth among the 10 best undervalued stocks to buy now according to Reddit, but the ranking includes businesses facing very different tests of earnings quality. Which company attracted the most hedge funds, and does Celsius Holdings, Inc.’s multi-brand opportunity offset the challenges already visible in its results?
A Larger Portfolio Is Not Yet a Stronger Earnings Engine
The second quarter exposed a split between consumer demand and reported revenue. Management said flagship CELSIUS net sales fell about 12%, while retail sales in tracked channels declined only 2%. Distributors were reducing inventories during SKU rationalization, trade spending weighed on realized revenue, and the club channel remained soft. Management also acknowledged that it cut too deeply into the assortment before replacement shelf space was ready. Those explanations suggest some pressure is transitional, but the extent of the recovery remains unproven.
Alani Nu offers a counterweight: its quarterly net sales were approximately $364 million, up 21%, and tracked retail sales rose 56%. Rockstar added about $66 million after its integration was completed in June. Management said the portfolio accounted for roughly one-fifth of energy-drink sales in tracked U.S. channels. Yet Alani’s retail growth translates into a smaller reported-revenue increase because of distribution-system allowances, channel mix, and promotional spending. Treating the 56% retail gain as the consolidated company’s earnings growth rate would therefore overstate the near-term economics.
Margin Recovery Is the Valuation Hinge
Gross margin was approximately 48% in the quarter, compared with 51.5% a year earlier, while adjusted EBITDA slipped to $184 million from $210 million. The resulting 22.5% adjusted EBITDA margin illustrates why the company’s expanding sales base has not automatically produced operating leverage. Management expects benefits from combined purchasing, improved freight routes, its second North Carolina manufacturing line and more disciplined price-pack architecture, but said higher diesel and aluminum costs could largely offset improvements in the near term.
This is where the multiple matters. The Seeking Alpha data shows Celsius Holdings, Inc. at 107.83 times trailing GAAP earnings and 22.72 times forward GAAP earnings, compared with a 16.69-times sector median on the forward measure. The same dataset puts forward enterprise value at 12.36 times EBITDA, above the sector’s 9.49 times. A low-looking forward P/E relative to the trailing figure thus reflects a significant projected earnings recovery, not a demonstrated bargain.
The accompanying consensus trajectory projects 2026 EPS growth of 378.38%, followed by 35.48% in 2027 and 19.66% in 2028, with estimated P/E ratios declining from 22.72 times in 2026 to 16.77 times in 2027 and 14.01 times in 2028 based on current share price. Those are estimates, not achieved results. They require the flagship brand to stabilize and integration savings to emerge faster than ongoing spending and commodity pressure.
That execution problem is not hypothetical. In an October discussion, Jim Cramer praised part of Celsius Holdings, Inc.’s acquisition story but questioned management’s delivery. What, precisely, did Cramer think was missing from an otherwise attractive energy-drink portfolio? His distinction between acquired growth and the performance of the original brand closely mirrors the valuation issue.
Capital Allocation and Investor Positioning Add Pressure
Celsius Holdings, Inc. repurchased approximately $100 million of shares in the second quarter, bringing first-half repurchases to about $124 million under its $300 million authorization. The company’s financial snapshot also shows roughly $631 million of cash against roughly $670 million of debt. Buybacks may support per-share earnings, but they do not replace an improvement in operating profitability, particularly when management is simultaneously investing in brands and distribution.
Insider Monkey’s Q2 2026 filings data show hedge fund holders falling to 49 from 52. As of September 30, short interest stood at 30.96 million shares, or 12.45% of the float, up from 28.91 million shares at the end of August. These figures are not real-time votes on the next quarter, but they demonstrate why investors may demand evidence beyond acquisition-driven sales expansion.
What Would Change the Earnings Debate?
The near-term test is whether reduced inventory disruption and better retail placement move CELSIUS sell-through back into reported revenue without another round of expensive promotions. Even management’s own expectation of high-40s gross margins in the third quarter suggests that a rapid return to the old margin structure is not assured. The comparison with another embattled consumer franchise shows why a lower valuation multiple alone may not establish value. For Celsius Holdings, Inc., a sustained margin recovery alongside renewed organic brand growth would make the forward earnings assumptions more credible; without it, the apparent compression in the P/E multiple is largely a forecast.
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