Celsius Holdings, Inc. CELH is likely to witness a top and bottom-line decline when it reports fourth-quarter 2024 earnings on Feb. 20. The Zacks Consensus Estimate for revenues is pegged at $328.97 million, indicating a 5.3% drop from the prior-year quarter’s reported figure.

The consensus mark for earnings has dropped by a penny in the past 30 days to 11 cents per share, which suggests a 35.3% decrease from the figure reported in the year-ago quarter. CELH has a trailing four-quarter negative earnings surprise of 9.3%, on average.

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CELH: Key Factors to Watch

Celsius Holdings has been grappling with a mix of internal and external challenges. The company’s 31% revenue decline in the third quarter of 2024 was a major setback, which stemmed from a significant inventory optimization adjustment from its primary distributor, PepsiCo. Although inventory levels are likely to have stabilized by the fourth quarter, this heavy reliance on a single partner remains a risk. Apart from this, broader macroeconomic pressures and lower discretionary spending have been affecting demand for CELH’s products.

Margins are another area of concern. The company’s gross margin dropped 440 basis points to 46% in the third quarter, largely due to the full rollout of a PepsiCo incentive program designed to capture market share. However, this initiative has come at the expense of profitability. Sales and marketing expenses also remain elevated at 37.6% of revenues, reflecting Celsius Holdings’ commitment to enhancing brand visibility. The persistence of high operating costs raises concerns for the quarter under review.

However, Celsius Holdings’ focus on innovation, branding and marketing has been aiding.  By regularly launching new flavors and product variations, CELH has been addressing shifting consumer preferences. Another key strength lies in the company’s expansive retail presence.  Celsius Holdings has secured prime shelf space in major retail chains, convenience stores and online platforms, enhancing its reach. Its diverse distribution strategy, including e-commerce and foodservice channels, further bolsters revenues.

Earnings Whispers for CELH Stock

Our proven model doesn’t conclusively predict an earnings beat for Celsius Holdings this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Celsius Holdings carries a Zacks Rank #4 (Sell) and has an Earnings ESP of -3.74%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Costco Wholesale COST currently has an Earnings ESP of +0.56% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2025 numbers. The Zacks Consensus Estimate for Costco’s quarterly revenues is pegged at $63.2 billion, which suggests 8.2% growth from the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Costco’s quarterly earnings per share is pegged at $4.09, indicating a 10.2% increase from the year-ago period. COST has a trailing four-quarter earnings surprise of 2%, on average.

Urban Outfitters URBN currently has an Earnings ESP of +8.58% and a Zacks Rank of 2. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.63 billion, which indicates growth of 9.4% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Urban Outfitters’ fourth-quarter fiscal 2025 EPS is pegged at 89 cents, which implies an almost 29% increase year over year. URBN has a trailing four-quarter earnings surprise of 22.8%, on average.

Sprouts Farmers Market SFM currently has an Earnings ESP of +9.58% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Sprouts Farmers’ quarterly revenues is pegged at $1.95 billion, which suggests an increase of 14.8% from the prior-year quarter.

The Zacks Consensus Estimate for Sprouts Farmers’ quarterly earnings per share is pegged at 72 cents, indicating 47% growth from the year-ago period. SFM has a trailing four-quarter earnings surprise of 15.3%, on average.

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