Can Celsius Maintain Gross Margins Above 50% Amid Tariffs?

Core Insights - Celsius Holdings, Inc. reported a gross margin of 51.5% for Q2 2025, slightly down from 52% in the previous year, influenced by Alani Nu's lower-margin profile and a $21.7 million inventory step-up adjustment [1][8] - The company anticipates that tariff-related cost pressures will impact margins in the latter half of the year, despite temporary cushioning from FIFO accounting [2][4] Financial Performance - Celsius achieved a gross margin of 51.5%, supported by lower raw material costs, improved production yields, and a favorable product mix [1][8] - The company expects to maintain gross margins in the low 50s range through vertical integration, procurement discipline, and cost-saving initiatives [3][4] - Celsius shares have increased by 17.2% over the past three months, outperforming the industry growth of 9.5% [7] Comparison with Competitors - PepsiCo reported a Q2 2025 core gross margin of 55.1%, down from 55.9% year-over-year, with a 5.1% decline in core operating income [5] - Coca-Cola posted a comparable gross margin of 62.2%, an increase of 80 basis points from the previous year, driven by operational improvements and pricing actions [6] Valuation and Earnings Estimates - Celsius trades at a forward price-to-earnings ratio of 41.56X, significantly higher than the industry average of 15.41X [10] - The Zacks Consensus Estimate for Celsius's EPS indicates year-over-year growth of 54.3% for 2025 and 28.6% for 2026 [11]