Why Is Everyone Ignoring Celsius Stock’s High Cash Yield?
Shares of Celsius (CELH) currently trade 58.5% below their two-year high, offering a compelling reason to examine the company. At that price, its free cash flow yield sits at 6.8%, compared with 4.5% for the median S&P 500 company. Such an elevated yield typically signals either a deeply discounted business or one facing anticipated contraction. So why are investors paying so little for Celsius’s cash?
Image from PixabayWhat You Own When You Hold Celsius Shares
Holding equity means holding a claim on the cash a business generates each year, with the yield measuring that output against the purchase price. For Celsius, free cash flow represents the money left over after the company covers its operating expenses and purchases necessary equipment.
Shareholders own a proportional stake in that generated cash, just as they own a share of the accounting profit, regardless of dividend payouts. Market valuations tend to track this cash generation over time, particularly when that cash is growing.
How Much Money Do Celsius’s Energy Drinks Bring In?
Over the last twelve months, Celsius generated about $0.5 billion of free cash flow from its energy drinks, up from $0.2 billion a year earlier. Three years ago, that figure stood at $0.1 billion, and cash flow has remained positive in every twelve-month period since.
The company markets these beverages under its namesake brand as well as the Alani Nu and Rockstar labels. During the Q2 FY2026 earnings call in August, executives noted that these brands account for roughly one in five energy drinks purchased across tracked channels in the United States.
Celsius retains a substantial portion of those sales as cash. Free cash flow accounted for 15.2% of revenue over the last twelve months, and the company spent only 9% of its operating cash flow on equipment.
Lenders hold a modest claim on this cash. Celsius owes about $695 million on its term loan against $631 million in cash, leaving net debt of roughly $64 million. In the first half of 2026, its operating profit covered interest expense about nine times. PepsiCo’s preferred shares also rank ahead of common stock: they carry a $1.1 billion liquidation preference and took about $19 million of the second quarter’s $55 million in net income.
Why Are Investors Wary Of Celsius Stock?
Investor hesitation likely centers mainly on the contraction of the company’s namesake brand. Net sales of Celsius-branded drinks fell about 12% year over year in Q2 FY2026, while retail sales in tracked channels declined by 2%. In August, executives indicated they expected third-quarter performance for the brand to closely mirror the second quarter. That period has now ended, with results currently pending.
Executives accepted responsibility during the Q2 FY2026 call. They explained that the company had discontinued too many Celsius products and delayed new releases while integrating the Alani Nu and Rockstar lines. Profit also fell during the period: adjusted EBITDA, a measure of operating profit, was $184 million, compared with $210 million a year earlier.
Yet the company’s total sales are still growing, presenting the profile of a discounted business rather than one in broad decline. Total revenue rose about 11% in Q2 FY2026, and Alani Nu’s net sales rose about 21%. Looking ahead, management plans to launch new Celsius products in early 2027 and is currently adding hundreds of sales staff to keep retail shelves stocked.
Investors still cannot tell whether Celsius can sustain its cash generation, making the third-quarter report the next critical piece of evidence. Recording free cash flow near $0.5 billion over twelve months, with debt levels still close to cash reserves, would show the company’s cash holding up even as its namesake brand shrinks.
How To Act On CELH?
Now you know CELH better. And that’s our purpose: to make you informed before you invest your money. However, making a bet on a single stock carries its own risks.
There is a smarter choice. Since its inception, the Trefis High Quality (HQ) Portfolio has beaten the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking.
If you’d rather act on CELH itself:
| Play Offense | Play Defense |
|---|---|
| Learn More About CELH & Invest | Save Taxes On Capital Gains |
| Earn From CELH Cash Secured Puts | Covered Call Against CELH |