Celsius Holdings, Inc. CELH entered 2026 with a significantly expanded energy drink portfolio following the integrations of Alani Nu and Rockstar Energy. While these additions have increased the company's scale, they have also created near-term pressure on profitability as the lower-margin businesses continue to be integrated into Celsius Holdings' operating and purchasing structure.
Gross margin declined 400 basis points year over year to 48.3% in the first quarter of 2026 from 52.3%. The decline primarily reflected the addition of Alani Nu and Rockstar, both of which had lower margin profiles upon acquisition. However, the gross margin improved approximately 90 basis points from the fourth quarter of 2025 as the underlying raw material cost of goods sold improved and fourth-quarter COGS write-offs and transition costs largely rolled off.
The quarter also reflected several temporary cost pressures. Higher London Metal Exchange aluminum prices and Midwest aluminum premiums increased packaging costs, while severe winter weather in parts of the Northeast resulted in incremental freight and freeze-protection expenses. Additional freight costs were also incurred as Rockstar inventory was rebalanced across the distribution network.
To improve profitability, Celsius Holdings continues to advance several operational initiatives, including its orbit inventory model, freight structure optimization, raw material alignment across Alani Nu and Rockstar, direct sourcing and mix improvements through price-pack architecture. The company has also secured aluminum conversion costs and price locks on several ingredients and vitamins while expanding procurement coverage into future years.
Although commodity inflation remains a near-term challenge, several integration-related cost headwinds have begun to ease. Going forward, the timing of Celsius Holdings' margin recovery will largely depend on its ability to translate its ongoing supply chain, procurement and operational initiatives into sustainable cost savings while managing elevated input and freight costs.
CELH Stock Price Performance, Valuation & Estimates
Shares of Celsius Holdings have tumbled 32% over the past year compared with the industry’s decline of 24%. The company currently carries a Zacks Rank #4 (Sell).
CELH Price Performance Versus Industry
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From a valuation standpoint, CELH trades at a forward price-to-earnings ratio of 16.85, higher than the industry’s average of 14.33.
CELH Valuation Compared With Industry
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The Zacks Consensus Estimate for CELH’s current and next fiscal-year earnings per share implies year-over-year growth of 18.7% and 23.6%, respectively.
Better-Ranked Stocks to Consider
United Natural Foods, Inc. UNFI, a major food wholesaler serving grocery retailers, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for United Natural’s current and next fiscal-year earnings per share suggests year-over-year increases of 254.9% and 21.4%, respectively. UNFI delivered a trailing four-quarter earnings surprise of 29.9%, on average.
Mama's Creations, Inc. MAMA, a maker of refrigerated prepared foods for retail and foodservice, carries a Zacks Rank #2 (Buy) at present.
The consensus estimate for Mama's Creations’ current and next fiscal-year EPS implies growth of 73.3% and 46.2%, respectively, from the prior-year reported levels. MAMA delivered a trailing four-quarter earnings surprise of 129.2%, on average.
Hormel Foods Corporation HRL, a global branded food company offering meat, protein and packaged food products, currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for Hormel Foods’ current and next fiscal-year EPS calls for a year-over-year jump of 9.5% and 3.5%, respectively. HRL delivered a trailing four-quarter earnings surprise of 3.2%, on average.
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Celsius Holdings Inc. (CELH): Free Stock Analysis Report
Hormel Foods Corporation (HRL): Free Stock Analysis Report
United Natural Foods, Inc. (UNFI): Free Stock Analysis Report
Mama's Creations, Inc. (MAMA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).