Celsius vs. PepsiCo: Which Beverage Stock Packs More Growth Ahead?

Core Insights - Celsius Holdings, Inc. (CELH) and PepsiCo, Inc. (PEP) are significant players in the beverage industry, with CELH focusing on functional, sugar-free energy drinks and PEP being a diversified multinational with a broad portfolio [1][2] Group 1: Celsius Holdings (CELH) - Celsius Holdings is strengthening its position in the energy beverage market, with the acquisition of Alani Nu contributing to approximately 20% of the total dollar growth in the energy drink category in Q1 2025 [3][4] - The company's strategy emphasizes sugar-free, better-for-you products, with sugar-free energy drinks accounting for 86% of the total growth in the energy category during the same period [4] - Innovation is key for CELH, as it launched new Vibe and ESSENTIALS flavors and CELSIUS HYDRATION, targeting the $1.4 billion hydration powder market [5] - Retail expansion is a growth driver, with distribution increased through over 1,800 Home Depot locations and 18,000 Subway restaurants [6] - Despite strong brand momentum, CELH faces operational and financial pressures, including rising costs and competition [7] Group 2: PepsiCo (PEP) - PepsiCo generated net revenues of $22.7 billion in Q2 2025, maintaining a strong market share in carbonated soft drinks, hydration, and sports beverages [8][9] - The company is integrating its North American businesses to enhance operational efficiency through investments in AI and unified data platforms [9][10] - PepsiCo is repositioning key brands to elevate real-food credentials, with growth in the $2 billion permissible snack segment and innovations in no-sugar colas and functional hydration platforms [11][12] - The company is targeting a return to the low end of its long-term top-line growth algorithm, supported by strong international momentum [12] Group 3: Financial Performance and Valuation - The Zacks Consensus Estimate for CELH's 2025 earnings per share (EPS) remains at 82 cents, while PEP's EPS estimate has increased by 13 cents to $8.00 [13][14] - Over the past month, CELH shares fell 0.7%, underperforming the S&P 500 Index, while PEP's stock surged 13.8% [16] - CELH trades at a forward price-to-earnings (P/E) ratio of 44.59X, compared to PEP's more modest forward P/E of 17.95X [17]