What a brutal six months it’s been for Celsius. The stock has dropped 46.2% and now trades at $34.07, rattling many shareholders. This might have investors contemplating their next move.
Is there a buying opportunity in Celsius, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is Celsius Not Exciting?
Even with the cheaper entry price, we're sitting this one out for now. Here are three reasons why CELH doesn't excite us and a stock we'd rather own.
1. Shrinking Operating Margin
Operating margin is an important measure of profitability accounting for key expenses such as marketing and advertising, IT systems, wages, and other administrative costs.
Looking at the trend in its profitability, Celsius’s operating margin decreased by 5.9 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its operating margin for the trailing 12 months was 5.6%.
2. Free Cash Flow Margin Dropping
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Celsius’s margin dropped by 4.8 percentage points over the last year. Continued declines could signal it is in the middle of an investment cycle. Celsius’s free cash flow margin for the trailing 12 months was 12.9%.
3. Previous Growth Initiatives Haven’t Impressed
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
Celsius historically did a mediocre job investing in profitable growth initiatives. Its four-year average ROIC was 2.5%, lower than the typical cost of capital (how much it costs to raise money) for consumer staples companies.
Final Judgment
Celsius isn’t a terrible business, but it isn’t one of our picks. Following the recent decline, the stock trades at 20.4× forward P/E (or $34.07 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We're pretty confident there are superior stocks to buy right now. Let us point you toward a top digital advertising platform riding the creator economy.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
