Why Is Celestica (CLS) Down 7% Since Last Earnings Report?

Core Insights - Celestica's recent earnings report showed strong performance, with adjusted earnings and revenues surpassing estimates, indicating potential for future growth [2][3]. Financial Performance - Quarterly net earnings reached $267.5 million or $2.31 per share, a significant increase from $151.7 million or $1.29 per share in the same quarter last year, driven by top-line improvement [4]. - Revenues for the quarter were $3.65 billion, reflecting a 44% year-over-year increase, exceeding management's guidance and the Zacks Consensus Estimate by $189 million [5]. - The Connectivity & Cloud Solutions (CCS) segment saw revenues rise 64% year over year to $2.86 billion, accounting for 78.3% of total revenues [6]. Segment Analysis - The Communications end market contributed to the CCS segment's growth, with hardware platform solutions revenues increasing 72% year over year to $1.4 billion, and segment margin improving to 8.4% [7]. - The Advanced Technology Solutions segment experienced a slight decline in revenues, down 1% year over year to $0.8 billion, but its margin improved to 5.3% [8]. Cash Flow and Liquidity - Operating cash flow for the quarter was $250.6 million, up from $143.4 million in the previous year, with free cash flow increasing to $155.9 million [9]. - As of December 31, 2025, the company held $595.6 million in cash and cash equivalents, with long-term debt at $750.5 million [10]. Future Guidance - For Q1 2026, Celestica anticipates revenues between $3.85 billion and $4.15 billion, with non-GAAP earnings per share expected to be in the range of $1.95 to $2.15 [12]. - The company projects 2026 revenues to be approximately $17 billion, an increase from the previous estimate of $16 billion, with non-GAAP adjusted earnings expected to be $8.75 per share [13]. Market Sentiment - Recent estimates for Celestica have shown an upward trend, with a consensus estimate shift of 15.1% [14]. - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [16]. Industry Comparison - Celestica operates within the Zacks Electronics - Manufacturing Services industry, where competitor Sanmina reported a 59% year-over-year revenue increase, highlighting strong industry performance [17].