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

Celsius Holdings, Inc. CELH posted a strong third-quarter 2025 gross margin of 51.3%, which expanded 530 basis points from last year. This marks a notable jump for a business managing two acquisitions and major distribution changes. CELH’s earnings call reveals that a mix of steady operational gains and temporary factors shaped the outcome.The margin improvement came from several helpful factors. Promotional spending was lower, the mix of products and channels shifted in a favorable way, and higher volumes helped the company get better cost leverage on raw materials. These are steady, operational improvements, and management suggests they should continue as Alani Nu and Rockstar move deeper into the distribution system.However, the quarter also highlighted a set of challenges that make the picture less certain. The recent acquisitions led to an inventory step up that raised the cost of goods sold. Both Alani Nu and Rockstar currently carry lower margin profiles, which is creating some drag as they are integrated. CELH also noted tariff pressure, higher freight costs and some waste and returns tied to the integration process. Management expects these issues to affect the fourth quarter before easing in 2026 as co-packing and sourcing improvements start to take hold.While the gross margin expansion is supported by real operational progress, it is also affected by short-term transition factors. Whether Celsius Holdings can keep margins at the current levels will depend on how quickly the new brands stabilize and how well the company manages tariffs, freight and integration costs.How Are PEP & MNST’s Margins Trending?    PepsiCo PEP reported a third-quarter gross margin of 53.6%, which declined from 55.4% recorded in the year-ago period. The company stated that supply-chain cost pressure and tariff headwinds weighed on the margin. However, PEP’s pricing and mix efforts helped partially offset those costs. PepsiCo’s margin performance will continue to depend on how effectively it balances ongoing cost inflation with its pricing strategy.Monster Beverage MNST delivered a third-quarter gross margin of 55.7%, up 250 basis points year over year. MNST attributes the margin expansion to pricing, supply-chain optimization and favorable mix. Monster Beverage’s margin trajectory will depend on maintaining operational efficiencies and managing input costs as volumes evolve.CELH Stock’s Price Performance, Valuation & EstimatesCELH’s Price Performance Versus IndustryShares of Celsius Holdings have rallied 55.4% year to date against the industry’s decline of 12.6%.Image Source: Zacks Investment ResearchCELH’s Valuation Compared to IndustryFrom a valuation standpoint, CELH trades at a forward price-to-earnings ratio of 27.37, much higher than the industry’s average of 14.87.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for CELH’s 2025 and 2026 earnings implies year-over-year growth of 80% and 20.7%, respectively.Celsius Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PepsiCo, Inc. (PEP): Free Stock Analysis Report Monster Beverage Corporation (MNST): Free Stock Analysis Report Celsius Holdings Inc. (CELH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks