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Here is What to Know Beyond Why Celsius Holdings Inc. (CELH) is a Trending Stock

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Celsius Holdings Inc. (CELH - Free Report) is one of the stocks most watched by visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.

Over the past month, shares of this company have returned +3.9%, compared to the Zacks S&P 500 composite's +1.3% change. During this period, the Zacks Food - Miscellaneous industry, which Celsius falls in, has gained 2.7%. The key question now is: What could be the stock's future direction?

While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.

Revisions to Earnings Estimates

Here at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

Celsius is expected to post earnings of $0.26 per share for the current quarter, representing a year-over-year change of +52.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -7.4%.

The consensus earnings estimate of $1.10 for the current fiscal year indicates a year-over-year change of +42.9%. This estimate has changed +1.2% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $1.49 indicates a change of +34.7% from what Celsius is expected to report a year ago. Over the past month, the estimate has changed -2.6%.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Celsius.

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

12-month consensus EPS estimate for CELH _12MonthEPSChartUrl

Revenue Growth Forecast

Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.

For Celsius, the consensus sales estimate for the current quarter of $431.69 million indicates a year-over-year change of +32.5%. For the current and next fiscal years, $1.74 billion and $2.19 billion estimates indicate +31.7% and +26.5% changes, respectively.

Last Reported Results and Surprise History

Celsius reported revenues of $355.71 million in the last reported quarter, representing a year-over-year change of +36.8%. EPS of $0.27 for the same period compares with $0.13 a year ago.

Compared to the Zacks Consensus Estimate of $388.87 million, the reported revenues represent a surprise of -8.53%. The EPS surprise was +35%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates three times over this period.


No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Celsius is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.


The facts discussed here and much other information on might help determine whether or not it's worthwhile paying attention to the market buzz about Celsius. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

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