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Celsius (CELH) Stock May Be Overvalued Despite Safety Claims Lawsuit

Simply Wall St · 2d ago

Celsius Holdings has seen its share price fall sharply in recent years, and the latest legal challenges around its Alani Nu energy drinks put even more focus on whether today's valuation can still be explained by its earnings power. With the stock back under pressure, investors are asking if the current price properly reflects what the business actually earns.

  • Over the past 3 years, Celsius Holdings shares have declined 50.1%, which puts the spotlight on whether the earnings story has shifted as much as the price.
  • The class action lawsuit over Alani Nu marketing and safety claims may affect expectations for future profitability, if it results in higher legal costs or changes to how the company sells and promotes its drinks.
  • There is a second opinion on Celsius Holdings worth weighing. See what analysts think Celsius Holdings's shares could be worth.

The issue now is whether Celsius Holdings' current share price is justified by its earnings when judged against that Fair Ratio benchmark.

If this lawsuit has you rethinking how you judge earnings against price, it can help to compare Celsius Holdings with a broader set of companies screened as 29 high quality undervalued stocks.

Does Celsius Holdings Look Pricey on Earnings?

The P/E ratio is a useful lens here because Celsius Holdings is being judged heavily on current earnings rather than assets or dividends. On this measure, the stock trades on about 109.7x earnings, which is far above the Beverage sector average of roughly 16.8x and also above the peer group around 35.0x. That is a large premium for each dollar of profit.

The Fair Ratio model, which adjusts the P/E investors might expect for Celsius Holdings based on its sector, size and risk profile, flags this gap as overvalued and unusually wide. Because the Alani Nu class action raises questions over future legal expenses and brand risk, paying such a high multiple means holders are accepting a lot of valuation pressure if earnings or sentiment weaken. For readers, the key question is whether the business quality and growth opportunities justify paying such a rich headline P/E. Explore the numbers behind Celsius Holdings's P/E valuation.

NasdaqCM:CELH P/E Ratio as at Sep 2026
NasdaqCM:CELH P/E Ratio as at Sep 2026

The Celsius Holdings Narrative: What Would Justify Today's Price?

Celsius Holdings' Simply Wall St Narratives pick up where the valuation puzzle leaves off and explain what kind of future on growth, margins and earnings would need to unfold for the stock to be worth materially more or less than it is today. Instead of a single P/E or model output, these scenarios unpack the assumptions that sit underneath that figure so you can see what has to hold over time and track whether reality lines up. They are available on Simply Wall St's Community page.

Community views on Celsius Holdings are split between a long runway story and a tougher reset narrative driven by regulation, costs and competition.

Bull case: 49% undervalued

"This demographic spends more, is more brand loyal, and was structurally underserved by Red Bull and Monster…"

Discover why this Narrative puts Celsius Holdings at 49% undervalued.

Bear case: 9% overvalued

"Intensifying competition from well-established industry giants and new market entrants will likely force Celsius to increase marketing and promotional spending…"

Explore why this Narrative puts Celsius Holdings at 9% overvalued.

One more Celsius Holdings check beyond the share price chart

Price multiples only tell part of the story, because the people setting priorities, allocating capital and rewarding themselves can tilt the long term outcome in powerful ways. See who runs Celsius Holdings and how they are paid.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.