Initiated 2026-09-25 · Price $28.43 (as of 2026-09-24, stockanalysis.com) · Mkt cap $7.19bn on 253.0mm common shares; ~$7.88bn as-converted incl. Series A · Consumer staples / energy drinks · Model: verified

Rating: Hold — Conviction: Low

Celsius is now a three-brand energy portfolio that depends on PepsiCo for 60% of revenue. Its namesake brand is shrinking (−11.7% in Q2 2026) while Alani Nu carries the growth. After a 44% fall in a year, the base case sits on the price, and the wide tails turn on one question the next two quarters answer: does brand CELSIUS stop shrinking? Hold, with Low conviction because the bear case is a brand fade, not a cyclical dip.

Model value range vs price
Bear $13.26Base $29.97Bull $47.54Price $28.43

Business overview

Celsius sells ready-to-drink energy drinks. Q2 2026 revenue was $817.9mm (+10.6%): CELSIUS $387.0mm (47%), Alani Nu $364.4mm (45%, acquired 2025-04-01) and Rockstar $66.5mm (8%, US/Canada rights bought from PepsiCo on 2025-08-28 for Series B preferred). North America is 97% of sales. PepsiCo distributes all three brands and took 60.2% of Q2 revenue, up from 33.3% a year earlier. Production is co-packed, so capex is ~1.5% of revenue. Earnings turn on three variables: whether CELSIUS returns to growth, whether Alani Nu keeps compounding inside PepsiCo, and gross margin (48.1% in Q2 against a "low 50s" guide).

Competition

Monster and Red Bull dominate the US category. An undated aggregator figure, likely from before the Alani Nu deal, puts them at ~35% and ~32% dollar share and Celsius near 10%. The company's own figure is a 20.9% share for the three-brand portfolio in the 13 weeks to 2026-06-28. The category is still growing: US convenience-store energy dollars rose ~10% in 2025 (Circana, via C-Store Dive). Pressure shows up first in price. Management blames CELSIUS's Q2 decline partly on "increased trade and promotional investment": a brand paying to hold shelf against Monster, Red Bull, zero-sugar entrants and its own sister brand. Monster, the closest listed pure-play, trades at 27.4x EV/EBITDA and 34.6x forward earnings, about double Celsius.

Bull case

  1. Alani Nu is a second growth engine, not a fad. It passed $1bn of tracked retail sales in H1 2026, with tracked dollars up ~56% in Q2. Plays out if it keeps growing after the PepsiCo transition orders roll off. Model: rev_growth
  2. Brand CELSIUS returns to growth by year-end. Management expects Q3 to look like Q2 and the brand to exit 2026 growing again, citing retailer resets. Plays out if Q4 2026 shows positive brand growth on clean inventory. Model: rev_growth
  3. Margin recovers as integration ends. Gross margin fell from 51.5% to 48.1% on integration and promotion, while SG&A fell to 29.0% of revenue from 32.2%. The guided low 50s on current SG&A would lift EBITDA margin well above ~22–23%, and transition working capital should normalise. Plays out if gross margin prints ≥50% by Q4 2026. Model: ebitda_margin, nwc_pct_rev

Bear case

  1. The namesake brand is declining despite promotion. CELSIUS fell 11.7% in Q2 on higher trade spend. Energy brands that lose momentum tend to lose it for years. Plays out if Q3 and Q4 stay negative. Model: rev_growth, ebitda_margin, nwc_pct_rev
  2. Growth was pulled forward by the distribution switch. Q4 2025 and Q2 2026 both carried extra PepsiCo orders as Alani Nu entered its system: pipeline fill that won't repeat. Plays out if shipped growth falls well below scanner growth. Model: rev_growth
  3. One customer, three brands. PepsiCo is 60% of revenue and 46% of year-end receivables, holds both preferred series and board seats, and sells competing drinks. Plays out if PepsiCo reprioritises its energy shelf. Model: rev_growth
  4. Promotion becomes permanent. If defending CELSIUS needs Q2-level trade spend indefinitely, gross margin stays in the 40s. Model: ebitda_margin

Valuation & balance sheet

Metric (definition) Current Own history (range or 5y avg) Peers Source, as-of
Forward P/E (consensus NTM EPS, basic shares) 21.1x n/a (unverified) Monster 34.6x · Coca-Cola 25.9x · Keurig Dr Pepper 12.7x stockanalysis.com, 2026-09-24
EV/EBITDA, aggregator (TTM; EV excludes preferred) 10.8x n/a (unverified) Monster 27.4x · Coca-Cola 23.9x · Keurig Dr Pepper 15.4x stockanalysis.com, 2026-09-24
EV/EBITDA, model basis (as-converted Series A + Series B claim; FY2025 adj. EBITDA less SBC $591.5mm) 14.4x FY2025 · ~12.0x FY2026E n/a as above (aggregator basis) model-summary.json; 10-Q 2026-06-30
FCF yield (TTM FCF $462.8mm / common market cap) 6.4% n/a (unverified) Monster 2.5% · Coca-Cola 3.8% · Keurig Dr Pepper 4.7% stockanalysis.com, 2026-09-24

Aggregator multiples omit both preferred series. The model counts in-the-money Series A ($550mm stated, convertible at $25.00 into ~22.0mm shares) as shares and out-of-the-money Series B ($585mm, $45.00 conversion) as a claim. Together they add ~$1.3bn of EV, which is why the model-basis multiple exceeds the headline 10.8x. Keurig Dr Pepper, a diversified coffee-and-soda company, is a weak comparable.

Model-implied value range (from model-summary.json; generic module, Gordon-growth DCF and exit-EV/EBITDA DCF, midpoints): Bear $13.26 · Base $29.97 · Bull $47.54 per share, i.e. implied returns of −53.3% / +5.4% / +67.2% vs $28.43. These ranges show how the bull and bear drivers translate into value; they are not price targets. The market is pricing the base case: consensus FY2026 revenue, a slow margin recovery, growth fading to mid-single digits. Both methods embed a de-rating. The exit method's 12.0x is 17% below today's 14.4x on FY2025 EBITDA, roughly today's multiple on FY2026E, since FY2025 has only nine months of Alani Nu. The Gordon method ($27.52 vs $32.43, an 18% gap) implies ~10.6x Year-5 EBITDA, about a quarter below today.

Tail, quantified (PepsiCo is 60% of revenue and the bear is a plateau; sensitivities outside the committed model):

Below $25 the Series A would stay a $550mm claim rather than convert, lowering these figures by roughly another $1. The skew is about symmetric (+67% / −53%) and worse in the tail.

Balance sheet: net debt ~$37mm ($667.9mm term loan at carrying value against $631.2mm cash at 2026-06-30), 0.06x FY2025 EBITDA. The model's coverage is 13.6x. Liquidity is the cash plus a $100mm undrawn revolver. The term loan was refinanced on 2025-10-02 and 2026-07-15; its maturity was not verified (the model assumes after 2030). Ratings: n/a (unverified). Ahead of common equity sit $1.135bn of preferred at stated value, with ~$56mm a year of 5% dividends.

Model note: tier full, status built, verification verified (3,207 formula cells matched in LibreOffice). No unverified inputs, no assumptions without basis; scenario consistency OK on all 14 rows. EBITDA is company adjusted EBITDA less SBC (FY2023: GAAP operating income + D&A, no adjustment table retrieved). FY2025 is a partial year for both acquisitions, so Y1 growth (+25.5%) is mostly annualisation. The 6.5% term-loan rate is judgment and moves EPS only. Model Y1 EPS of $1.87 sits well above consensus FY2026 of $1.43: the model line is before ~$56mm of preferred dividends, on as-converted shares, and excludes deferred distributor-cost amortisation ($24.6mm in H1 2026). The gap is not fully reconciled; track against reported figures.

Scenario stress test

Reasoned from the bull/bear drivers above. The model column comes from the scenario overlays (Base case + shock).

Scenario Effect Mechanism Magnitude Model Δ value vs Base ($/sh)
S1 Fast equity crash − Risk-premium spike on a stock already down 44% in a year; no operating channel over weeks Med −$2.91
S2 Slow bear / recession − A premium can can be traded down to multipacks and private label; club channel already soft. Milder than Base − Bear on purpose: a recession is a transitory volume dip, while the bear case is a permanent brand plateau High −$6.49
S3 Rapid rate shock − Discount rate and multiple; floating-rate term loan costs more but cash earns more Med −$3.78
S4 Slow rate grind − Same channel, grinding Low −$1.36
S5 Soft-landing cuts + Lower discount rate on a de-rated growth name with the consumer intact High +$5.58
S6 Recession-driven cuts − Volume and promotion hit outweigh the lower discount rate Low −$0.72
S7a Credit liquidity shock − Term loan roughly matched by cash, so mainly a risk-premium event Low −$1.46
S7b Slow default cycle − PepsiCo is the counterparty that matters; small convenience-channel effect Low −$1.20
S8 Stagflation − Aluminium, sweetener and freight inflation against a consumer resisting another price rise on a premium can Med −$3.81
S9a Dollar spike − International is 3.3% of revenue; negligible translation Low −$0.07
S9b Dollar slide + Mirror of S9a Low +$0.07
S10 Melt-up + Risk appetite returns to beaten-down consumer growth names Med +$1.94
S11 Energy supply shock − Freight and can costs; gasoline squeezes the convenience-store shopper Low −$0.16
S12 Mega-cap/AI derating ± No operating linkage; a rotation toward de-rated consumer names is a flows argument, so the shock is small Low +$0.49

No macro row approaches the brand-specific bear case; funding rows are small because net debt is near zero. Currently active/on watch per the playbook: S3 partially active (price leg met, pace legs short); S8, S10 and S11 on watch, S11 escalated after the 2026-09-19/20 Saudi/Houthi events.

Model value change vs Base, by scenario
S2 Slow bear / recession−$6.49S8 Stagflation−$3.81S3 Rapid rate shock−$3.78S1 Fast equity crash−$2.91S7a Credit liquidity shock−$1.46S4 Slow rate grind−$1.36S7b Slow default cycle−$1.20S6 Recession-driven cuts−$0.72S11 Energy supply shock−$0.16S9a Dollar spike−$0.07S9b Dollar slide+$0.07S12 Mega-cap/AI derating+$0.49S10 Melt-up+$1.94S5 Soft-landing cuts+$5.58

What would change the call

Upgrades if: brand CELSIUS posts positive year-on-year revenue in Q4 2026 without a further step-up in trade spend; or gross margin returns to ≥50% while Alani Nu's shipped growth tracks its scanner growth; or the price falls toward the bear case while CELSIUS stabilises. Downgrades if: CELSIUS declines again in Q4 2026 or FY2027 guidance implies continued brand decline; or gross margin stays below 48%; or PepsiCo changes distribution terms or its share of revenue rises further while the brands slow.

Watch items

Sources