Celsius companies (NASDAQ: CELH) Shares are having a great day on Thursday, rising 11.5% through 10:05 a.m. (ET) thanks to some bullish Wall Street analysts.
Piper Sandler yesterday released the results of a survey confirming Celsius’s continued popularity among teen energy drink consumers. Individual, Stifel reported this morning at a National Association of Convenience Stores trade show, reporting positive sales trends in that market segment.
A double dose of good news for Celsius
CNBC reported on the Piper news this morning, noting that among energy drink brands favored by teens, Celsius has a 35% market share. That’s actually pretty amazing. Across the market, a 2023 Statista survey found that Celsius only scored in the single digits, while Red Bull and Monstrous drink (NASDAQ: MNST) dominated this market, with market shares of almost 40% and 30% respectively.
Although the two studies cover different markets, Celsius’ greater popularity among the younger contingent suggests that Celsius’ overall market share will grow as these teens get older. Meanwhile, Stifel’s report shows “generally improving sales trends” for energy drinks sold in convenience stores through 2024, where 62% of all energy drink sales occur.
Is Celsius stock a buy?
A larger share in a growing market? That sounds pretty bullish for Celsius stock. However, this still leaves the question of valuation. Growth prospects aside, are Celsius shares cheap enough to buy?
With earnings currently at 30 times, you might not think so. But the situation described by these two analyst reports suggests that Celsius is going to experience monstrous growth (if you’ll pardon the term) in the coming years. Based on analyst forecasts collected by S&P Global Market Intelligence, Wall Street expects Celsius to more than triple its reported earnings over the next five years, from $0.77 in 2023 to $2.74 per share in 2028.
That equates to a growth rate of almost 29% per year – almost exactly in line with the price-earnings ratio. And if you ask me, that seems like fast enough growth to buy Celsius stock.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Celsius and Monster Beverage. The Motley Fool has a disclosure policy.
Why Celsius Stock Surged 11.5% Today was originally published by The Motley Fool
