Down More Than 74% From Its High, Is Celsius Holdings Stock Too Cheap to Pass Up?

The past year has been disastrous for energy drink maker Celsius Holdings (NASDAQ: CELH), whose share price is down a staggering 66% during that time frame. This once-hot growth stock has seen its valuation go into a tailspin as investors become concerned about its suddenly less impressive numbers and its underwhelming near-term prospects.

It finished last week at a price of $25.69 -- down more than 74% from its 52-week high of $99.62. The company is facing some challenges, but is it in bad shape and could more of a decline be coming for Celsius, or could now be a good time to consider buying this beaten-down stock?

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Celsius' growth continues to underwhelm

A key reason Celsius has been a hot growth stock to own in recent years is due to its impressive growth. But the past two quarters have been troubling for the business. Its main distribution partner, PepsiCo, has been optimizing (i.e., reducing) inventory of Celsius products, and that has weighed on the company's growth rate significantly.

CELH Operating Revenue (Quarterly YoY Growth) data by YCharts

Sales were down 4% for the last three months of the year, but the good news is that the decline wasn't nearly as disastrous as the 31% drop that Celsius experienced in the previous quarter. That, however, may be of little comfort for investors, as the company's revenue for the full year only increased by 3%, to around $1.4 billion.

A crash back down to reality?

Although Celsius' stock has nosedived over the past year, some investors may be wondering if it's simply coming back down to reality; even with this decline, the stock's five-year gains are around 1,300%. It's now trading at 29 times its expected future earnings (based on analyst expectations), and its price-to-sales multiple is less than 5, which is far lower than what is has averaged in the past.

CELH PS Ratio data by YCharts

The stock may still look expensive if you don't expect a recovery in its growth rate.

But with Celsius looking to acquire rival drink company Alani Nutrition, that could put it in a great position to accelerate its growth rate and become an even bigger player in the sugar-free beverage market. Focusing on those types of beverages could be advantageous by catering to a more health-conscious audience and perhaps benefiting from an uptake in GLP-1 medications, which may help consumers turn away from sugary products.

Is Celsius Holdings stock a good buy?

There's been a fair bit of bearishness around Celsius Holdings of late, but this still looks to be a promising growth stock to buy for the long term. It has established itself as one of the top energy drink brands, and its valuation appears to be in line with that of rival Monster Beverage, which trades at a forward price-to-earnings multiple of 28 and more than 7 times its trailing revenue.

Celsius' focus on the sugar-free market could be what leads to a stronger growth rate for the business in the future. While a turnaround for the stock may not be imminent, it may be an investment worth buying and holding.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Celsius and Monster Beverage. The Motley Fool has a disclosure policy.