Celsius Holdings Posts 51.3% Gross Margin in Q3: Is It Sustainable?

Core Insights - Celsius Holdings, Inc. (CELH) reported a strong third-quarter 2025 gross margin of 51.3%, an increase of 530 basis points from the previous year, despite managing two acquisitions and significant distribution changes [1][8] - The margin improvement was driven by lower promotional spending, favorable product and channel mix, and higher volumes that provided better cost leverage on raw materials [2][8] - However, challenges such as increased cost of goods sold due to recent acquisitions, lower margin profiles of Alani Nu and Rockstar, tariff pressures, and higher freight costs were noted, which may impact future performance [3][4][8] Financial Performance - CELH's stock has increased by 55.4% year to date, contrasting with a 12.6% decline in the industry [7] - The company trades at a forward price-to-earnings ratio of 27.37, significantly higher than the industry average of 14.87 [10] - The Zacks Consensus Estimate for CELH's earnings indicates year-over-year growth of 80% for 2025 and 20.7% for 2026 [12] Industry Comparisons - PepsiCo (PEP) reported a third-quarter gross margin of 53.6%, down from 55.4% year-over-year, affected by supply-chain cost pressures and tariffs, although pricing and mix efforts provided some offset [5] - Monster Beverage (MNST) achieved a third-quarter gross margin of 55.7%, up 250 basis points year-over-year, attributed to pricing, supply-chain optimization, and favorable mix [6]