Energy drink maker Celsius is the IBD Stock Of The Day for Thursday. CELH stock is working on a buy point and near its record high after rallying more than 70% so far in 2024.
Celsius has rocked this year as its Q1 results from May marked five straight quarters of triple-digit earnings growth. Celsius ranks as the third most-popular energy drink in the U.S., trailing Red Bull and Monster Beverage, with an 11.4% share of all energy drink sales at multi outlet with convenience stores (MULOC) locations in Q1.
The Boca Raton, Fla.-based company on May 7 reported a 108% jump in earnings to 27 cents per share, clearing estimates of 20 cents per share. Revenue for the energy drink maker leapt 37% to a first quarter record $355.7 million, but fell short of expectations of $390.4 million.
But there were bright spots. First-quarter gross margin increased to 51.2% from 43.8%.
Celsius noted that retail sales of its drinks at U.S. MULOC locations leapt 72.1% year over year in Q1. Sales on Amazon increased 30% to $28 million, and Celsius is the top seller among energy drinks on the site. Meanwhile, case volume sales in its food service channel spiked 186%.
Celsius also said that retailers are resetting shelves for spring, which is about one-third complete as of March 31. Once the reset concludes, Celsius expects its "best shelf space gains in company history," making its products more visible and accessible to customers. Celsius expects the shelf gains to begin appearing in scanner data starting in July.
The company warned "ongoing inventory fluctuations may be expected in subsequent quarters," due to its largest distributor comprising 62% of total North American sales in the first quarter.
Celsius CFO Jarrod Langhans noted that the company is monitoring rising fuel costs and commodity costs, such as aluminum for cans. "As a result, we are taking a conservative approach to the remainder of the year," Langhans said during the earnings call.
The company maintained its 2024 gross margin outlook in the high-40% range from February, which Langhans called "very achievable." But management was not ready to sway from that forecast until further in the year.
Still, further growth is expected, buoyed by international expansion.
FactSet analysts forecast Celsius earnings in the second quarter will jump nearly 53% to 26 cents per share on 30% revenue growth to $424 million. Full-year earnings are seen increasing about 46% to $1.12 per share while revenue jumps 32.5% to $1.75 billion.
Celsius Stock
Celsius stock leads the Beverages-Non-Alcoholic Industry Group according to the IBD Stock Checkup. The group ranks a strong 26th out of the 197 industry groups tracked by IBD.
The stock is on the IBD 50 list, the Leaderboard watchlist, and the IBD Big Cap 20.
CELH is building a cup base with a 99.62 buy point, which matches its all-time high from March 14. The pattern could form a handle in a few days, which would drop the buy point slightly to 98.85.
The 32%-deep cup base found support near the top of a prior consolidation.
Shares on Thursday fell a fraction, finding support at their 10-day line. The stock is trading well above its other technical moving averages.
Celsius also showed the Ants indicator, which is a sign of strength. The Ants indicator, the notched green line on the weekly MarketSurge chart, indicates unusually strong price and volume action over a rolling three-week period.
Celsius has a perfect 99 Composite Rating, which combines various technical indicators into one easy-to-read score. Shares have an 80 EPS Rating. CELH stock's relative strength line is near 52-week highs and it has a 97 RS Rating.
Celsius stock bolted 71.8% so far this year.
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