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CLS vs. JBL: Which Stock Has the Edge in AI-Fueled Demand Backdrop?
ZACKSยท2025-08-20 13:25

Core Insights - Celestica Inc. (CLS) and Jabil Inc. (JBL) are prominent players in the electronics manufacturing services (EMS) industry, with Celestica being one of the largest EMS companies globally, serving various sectors including cloud-based services and business enterprises [1][4] - Jabil is also a major global supplier of EMS solutions, providing a wide range of services across multiple industries such as aerospace, automotive, and telecommunications [2][10] - Both companies are well-positioned to meet the growing demands of artificial intelligence (AI) within the EMS landscape [3][8] Celestica Overview - Celestica has over two decades of manufacturing experience and focuses on delivering cloud-optimized data storage and networking solutions, which are increasingly in demand due to the rise of AI applications [4][5] - The company emphasizes product diversification and aims to strengthen its presence in high-value markets, which enhances business resilience by reducing dependence on any single industry [5] - Despite its strengths, Celestica faces challenges with high research and development costs and stiff competition from other industry giants, which have led to margin pressures [6] Jabil Overview - Jabil operates in 100 locations across 30 countries, benefiting from strong margins and cash flow dynamics, along with extensive end-market experience and technical capabilities [7][10] - The company is expected to see growth driven by AI data center infrastructure and the adoption of 5G and cloud computing, supported by effective supply chain management [10][11] - However, Jabil also contends with a competitive environment and geopolitical tensions that may impact its margins [11] Financial Performance and Estimates - Celestica's 2025 sales and EPS estimates indicate a year-over-year growth of 20.6% and 43%, respectively, with a positive trend in EPS estimates over the past 60 days [12] - In contrast, Jabil's 2025 sales and EPS growth is projected at 0.9% and 10.6%, respectively, with a slight upward trend in EPS estimates [14] - Over the past year, Celestica has outperformed Jabil significantly, with a price increase of 244.1% compared to Jabil's 89.7% [15] Valuation Comparison - Jabil's shares trade at a lower price/earnings ratio of 18.73 compared to Celestica's 29.28, making Jabil appear more attractive from a valuation perspective [15] - Despite Jabil's favorable valuation metrics, Celestica has shown superior revenue and EPS growth, leading to a stronger overall investment case for Celestica at this time [17]