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Celestica Surges 139% in 6 Months: How to Play the Stock
ZACKS· 2025-09-04 17:31
Core Insights - Celestica, Inc. (CLS) shares have surged 139% in the past six months, outperforming the Electronics - Manufacturing Services industry growth of 64.9% and the Zacks Computer & Technology sector as well as the S&P 500 during the same period [1][8] - The company has outperformed peers such as Jabil, Inc. (JBL) and Sanmina Corporation (SANM), whose shares have risen 45.1% and 54.2%, respectively [2][8] Growth Drivers - Celestica's growth is driven by strong demand in the Connectivity & Cloud Solutions segment, particularly in its Hardware Platform Solutions business, with a transition from 400G to 800G switches accelerating revenue growth [3][8] - The company is capitalizing on AI investments, which are driving demand for its data center interconnects, edge solutions, and servers and storage-related products [3][8] - Strategic collaborations with Broadcom and AMD are enhancing Celestica's product offerings, such as the DS4100 switch and SC6100 storage controller, positioning the company competitively against peers [4][8] Financial Management - Celestica demonstrates strong capital discipline, with capital expenditure at 1.1% of revenues in Q2, below the projected range of 1.5-2% [5][8] - The company is focusing on higher utilization of manufacturing facilities, with only 40 basis points of capex allocated to maintenance, indicating a strong emphasis on growth programs [5][8] - Inventory balance increased to $1.92 billion in Q2 from $130 million in Q1, with cash cycle days improving to 66 days from 69 days, suggesting anticipation of strong demand [6][8] Supply Chain Resilience - Celestica operates in 16 countries, benefiting from a diversified manufacturing network that mitigates geopolitical and tariff-related uncertainties [9][8] - Investments in expanding capacity and capabilities in the U.S., Thailand, and Malaysia, along with design centers in India and the U.S., have minimized supply chain disruptions [9][8] Earnings Estimates - Earnings estimates for Celestica for 2025 and 2026 have increased over the past 60 days, indicating positive market sentiment [10][8] Valuation Metrics - Celestica's shares are currently trading at a premium with a price/earnings ratio of 33.33 compared to the industry average of 21.56 [11][8] Long-term Outlook - The company's diverse manufacturing strategy and efficient capital management are expected to support long-term growth, particularly in the CCS segment driven by AI applications [12][8]
Will Growing AI Proliferation Drive Sustainable Growth for Celestica?
ZACKS· 2025-07-09 17:46
Core Insights - Celestica, Inc. is well-positioned to benefit from the growing AI proliferation in the data center and edge infrastructure market, with the AI hardware market expected to grow at a 22.4% CAGR, reaching $210.5 billion by 2034 from $34.05 billion in 2025 [1] - The company is expanding its offerings through innovation and strategic collaborations to capitalize on emerging market trends [2] - Celestica's extensive 800G Family of Networking Switches is anticipated to be a major growth driver, optimized for AI/ML and Big Data Analytics [3] Company Developments - The DS4100 switch, designed with Broadcom's TH4-12.8T switch chipset, is gaining traction in the data-center networking market [2] - The introduction of the ES1500 switch is tailored for edge AI deployments and IoT expansion in various sectors [3] - Celestica's shares have surged 167.5% over the past year, outperforming the industry's growth of 96.4% [7][8] Competitive Landscape - Competitors include Jabil, Inc. and Flex Ltd., both of which are also benefiting from demand in AI-related sectors [4] - Jabil announced a $500 million multi-year investment initiative to expand its manufacturing capabilities in the AI data center infrastructure market [5] - Flex is focusing on industrial AI and has improved its data center solutions through the acquisition of JetCool Technologies [6] Valuation Metrics - Celestica trades at a forward P/E ratio of 27.89, which is above the industry average, potentially raising valuation concerns [8][9] - The Zacks Consensus Estimate for Celestica's earnings for 2025 and 2026 has remained unchanged over the past 60 days [11]
CLS Q1 Revenues Surge 20% Year Over Year: What's Driving the Growth?
ZACKS· 2025-06-30 17:01
Core Insights - Celestica, Inc. (CLS) reported a 20% year-over-year revenue increase to $2.64 billion in Q1 2025, driven by strong performance in the Connectivity & Cloud Solutions segment [1] - The company anticipates a revenue of $10.91 billion in 2025, reflecting a 13.15% year-over-year growth, supported by demand in the AI-data center infrastructure market [3] Group 1: Company Performance - CLS experienced significant growth in its High Performance Solutions product lines, with revenues up 99% year-over-year, primarily due to strong sales of 400G and 800G switches [1] - The introduction of innovative products like the ES1500 enterprise access switch and the DS4100 800G switch is enhancing CLS's market position [2] - Celestica's stock has increased by 165.5% over the past year, outperforming the industry growth of 94.7% [7] Group 2: Competitive Landscape - Celestica faces competition from Sanmina Corporation and Jabil, Inc. in the electronics contract manufacturing services sector [4] - Sanmina reported $1.59 billion in revenues for Q2 2025, marking a 9.7% year-over-year growth, with a projected revenue of $8.1 billion for 2025 [5] - Jabil's Intelligent Infrastructure segment generated $3.4 billion in revenues, up 51% year-over-year, with an expected revenue of $29.05 billion for the current fiscal year [6] Group 3: Valuation and Estimates - Celestica's forward price-to-earnings ratio stands at 27.47, which is above the industry average [8] - The Zacks Consensus Estimate for Celestica's earnings for 2025 has remained unchanged over the past 60 days [9]