Today witnessed a significant surge in Celsius Holdings' stock price.
Celsius Holdings (CELH) shares saw a significant boost today, climbing by 23.4% following the company's announcement of better-than-expected earnings and its plan to acquire energy drink maker Alani Nu for a whopping $1.8 billion.
At 10:39 a.m. ET, the stock was on a roll.
Celsius Drops Some Good News
Eager to impress, Celsius hurried to release its earnings report ahead of an upcoming event. And boy, did it deliver!
The energy drink giant reported a Q4 revenue decline of 4% to $332.2 million, but it managed to outshine expectations with a consensus of $327 million. Despite a 18% plummet in adjusted earnings per share to $0.14, it still surpassed estimates of $0.10.
Gross margins improved, moving from 47.8% to 50.2%, a positive sign for the business.
The highlights, however, didn't stop there. Celsius also unveiled its plans to purchase Alani Nu, the fourth-largest energy drink maker, for a net price of $1.65 billion after factoring in $150 million in tax assets.
At this price, Celsius is essentially spending less than three times trailing revenue and about 12 times adjusted EBITDA on Alani Nu.
Alani Nu: The New Kid on the Block
Alani Nu's impressive retail performance, combined with its shakes and snacks, is expected to be a fantastic fit for Celsius's product line.
Once the deal is sealed, the two companies will share a sizable 16% of the market.
What's Next for Celsius?
Ordinarily, the acquisition news may not have sent the stock soaring, but Celsius's share price had taken a hit due to its issues with PepsiCo's distribution deal.
Despite no official guidance, Celsius's retail sales growth of 22% in 2021, as reported by Circana, suggests there's plenty of room for growth in the future.
Although Celsius didn't provide any insights into its future earnings, with retail sales like that, investors might be in for a surprise.
Enrichment Insights:- Celsius's acquisition of Alani Nu is anticipated to trigger substantial revenue growth, with both companies projecting around $2 billion in combined sales once the deal is finalized.- Alani Nu's impressive retail performance saw a 78% increase in sales year-on-year and will significantly contribute to Celsius's growth.- Analysts have kept positive sentiments towards Celsius, issuing price targets between $31 to $37, reflecting optimism about the acquisition's potential benefits.- TD Cowen has revised its price target to $30, maintaining a Hold rating on the shares, indicating a slightly more upbeat view of Celsius Holdings' stock valuation.- The deal is expected to deliver $50 million in cost synergies over a two-year period, further strengthening Celsius's financial health and profitability.- Key Alani Nu team members will work as advisors post-acquisition, ensuring a smooth integration process.- The combined company will have a formidable presence in the energy drink sector and will cater to a rapidly expanding wellness-oriented audience.
Investors eagerly watched Celsius Holdings' (CELH) stock performance after the company announced better-than-expected earnings and a planned acquisition of energy drink maker Alani Nu. Despite facing a 18% decrease in adjusted earnings per share, Celsius managed to surpass expectations. In order to boost its product line, Celsius plans to invest $1.65 billion in Alani Nu, which will dramatically increase its market share. The acquisition could also lead to significant cost synergies, enhancing the combined company's financial health and profitability.
