Celsius's shares experiencing significant surge in value this week.
Celsius, the third-largest energy drink brand in the States with shares skyrocketing 44%, according to S&P Global Market Intelligence, saw a boost last week. The catalyst? A major acquisition announcement. On Thursday, Celsius revealed it was buying Alani Nu, the fourth-biggest energy drink brand in America, for a cool $1.65 billion.
This move was more than just a diversion from somewhat rocky 2024 results. It was a game-changer. Celsius paid less than three times sales and 12 times "fully synergized" EBITDA for Alani Nu, a bargain considering the latter's impressive 50% annual growth in energy drink sales over the past three years.
The combination of the two brands now gives them a 16% share of the US energy drink market, projected to grow by 10% annually through 2029. That's more than double Red Bull's retail sales growth in 2024 alone.
Celsius' earnings weren't as impressive. While retail sales grew by 22% in 2024, the stock's revenue only rose 3% due to sales timing with primary distributor PepsiCo. However, the company managed to gain 160 basis points of market share in 2024, a positive sign.
The acquisition of Alani Nu is expected to be cash-accretive in 2025 and could see a sales boost from joining Pepsi's distribution network. Investors will need to be patient, but Celsius remains an intriguing growth stock.
Enrichment Insights:
- Acquiring Alani Nu strengthens Celsius's position in the energy drink market, particularly among women driving category growth.
- The combined platform is expected to drive approximately $2 billion in sales, positioning Celsius as a major player in the energy drink category.
- The deal represents an attractive valuation of less than 3x 2024 revenue and approximately 12x fully synergized 2024 EBITDA, indicating a strong financial position for Celsius.
- The acquisition paves the way for expansion into adjacent categories, broadening Celsius’ consumer reach and supporting its long-term growth ambitions.
- Celsius' decision to invest in Alani Nu, announced last Thursday, was strategically positioned to strengthen their stance in the highly competitive energy drink market.
- The announcement of the acquisition of Alani Nu, the fourth-largest energy drink brand in America, initially caused turbulence in the financial market, but investors are now seeing the potential for substantial returns.
- With the acquisition, Celsius expects to boost its revenue by tapping into the vast distribution network of their new partner, PepsiCo, resulting in increased sales of products like their popular Pepsi-branded energy drink.
- The company's recent announcement to invest in Alani Nu, with a valuation of less than three times 2024 revenue and twelve times fully synergized 2024 EBITDA, illustrates a solid financial foundation for Celsius' future expansion beyond energy drinks.
