Key Takeaways CLS grew operating cash flow to $408.9M for the first nine months of 2025, up from $330.5M a year earlier.Celestica saw a 43% jump in CCS revenue, led by 400G and 800G switches amid strong AI-driven demand.CLS raised 2025 free cash flow guidance to $425M as revenue growth and a stable cash cycle support liquidity.Celestica, Inc. (CLS) generated an operating cash flow of $126.2 million compared with $122.8 million in the year-ago quarter, bringing the respective tallies for the first nine month ...

Key Takeaways The EMS industry has surged in 2025, driven by AI demand and strong momentum in manufacturing services.Celestica is seeing robust growth from AI data centers and high-speed networking products. Jabil and Sanmina are benefiting from AI infrastructure, diversification and rising enterprise demand. The electronics manufacturing services (EMS) space primarily consists of companies that provide design, engineering and manufacturing services to electronics original equipment manufacturers (OEMs). Th ...

Core Insights - Celestica, Inc. (CLS) reported quarterly revenues of $3.19 billion, reflecting a year-over-year increase of 27.8%, surpassing management's guidance and the Zacks Consensus Estimate by $170 million [1][8] Group 1: Company Performance - The growth in revenue was driven by strong demand in the Connectivity and Cable Solution portfolio, which saw net sales surge 43.2% year over year to $2.41 billion, primarily due to the demand for 800G and 400G switching products [3][8] - Celestica's management is optimistic about future revenue growth, projecting revenues between $3.325 billion and $3.575 billion for the next quarter, indicating a potential 36% year-over-year growth [4][8] - The company's shares have increased by 215.6% over the past year, significantly outperforming the industry growth of 93.7% [7] Group 2: Market Opportunities - The global data center networking market is valued at $38.49 billion in 2024, with a projected compound annual growth rate of 17.2% from 2025 to 2033, presenting a substantial growth opportunity for Celestica [4] - Celestica is actively collaborating with industry leaders like AMD and Broadcom to enhance its product offerings in the expanding AI infrastructure market [2] Group 3: Competitive Landscape - Competitors such as Jabil, Inc. and Flex Ltd. are also performing well, with Jabil reporting revenues of $8.3 billion, up from $6.96 billion year over year, and Flex generating $6.8 billion, up 4% year over year [5][6] - Jabil's growth was driven by demand in Capital Equipment and AI-related Cloud and Data Center Infrastructure, while Flex's diversified portfolio across multiple industries remains a key strength [5][6] Group 4: Valuation and Earnings Estimates - Celestica trades at a forward price-to-earnings ratio of 37.68, higher than the industry average of 24.13 [9] - Earnings estimates for 2025 have increased by 6.3% to $5.90, and for 2026, they have risen by 20.9% to $8.20 over the past 60 days [10]

Core Insights - Flex Ltd. is experiencing robust business performance, primarily due to increasing demand in its data center and technology-driven sectors, while facing challenges in the automotive sector within its Reliability Solutions segment [1] Financial Performance - In the last reported quarter, revenues from the Reliability Solutions Group grew by 3% to $3 billion, representing 45% of net sales, driven by strong growth in Power and moderate gains in Health Solutions and Core Industrial, despite ongoing automotive sector weakness [2] - The adjusted operating margin for the Reliability Solutions division increased to 6.5%, up 105 basis points from the previous year, attributed to a favorable mix from the Power business, effective cost management, and disciplined execution [4] - Flex anticipates Reliability Solutions revenues to grow in the low- to mid-single digits, supported by strong power demand and accelerating growth in medical devices in fiscal 2026, although concerns remain regarding the automotive and renewables sectors [5] Market Dynamics - The durability of data center demand is crucial for Flex to continue offsetting pressures from the automotive sector, with revenues expected to rise at least 35% this year in the data center segment, providing significant mix benefits [6] - Flex's diversification across mission-critical industrial and healthcare verticals reduces reliance on any single end market, including automotive [6] Competitive Landscape - Jabil is positioned to benefit from AI-driven data center expansion and higher demand for advanced cooling solutions, but faces challenges in consumer-driven products and volatile automotive demand [7][8] - Celestica is capitalizing on AI investments driving demand for its data communications and processing infrastructure products, although it faces concerns in its ATS segment and customer concentration risks [9][10] Stock Performance and Valuation - Flex's shares have increased by 19.5% in the past month, outperforming the Electronics - Miscellaneous Products industry, which grew by 10.1% [11] - Flex trades at a forward 12-month price-to-earnings (P/E) ratio of 21.09, below the industry average of 25.53 [13] - The Zacks Consensus Estimate for Flex's earnings for fiscal 2026 has been revised upward over the past 60 days, indicating positive sentiment [14]

Industry Overview - The electronics manufacturing services (EMS) industry is rapidly evolving and is expected to grow at a compound annual growth rate (CAGR) of 6.06% due to factors such as digital transformation, AI data center expansion, consumer electronics, IoT markets, 5G adoption, and automotive innovation [1] Company Profiles Sanmina Corporation - Sanmina is a global provider of electronics contract manufacturing services, focusing on engineering and fabricating complex components and offering complete end-to-end supply chain solutions [2] - The company emphasizes strengthening technology leadership and a customer-focused approach as key elements of its long-term growth strategy [4] - Sanmina's comprehensive portfolio includes product design, manufacturing, assembly, testing, and aftermarket support, allowing customers to rely on a single partner throughout the product lifecycle [5] - The company has a strong liquidity position, with a current ratio of 1.72 and a debt-to-capital ratio of 10.6%, which is significantly lower than the EMS industry average of 37.9% [8][15] Celestica Inc. - Celestica primarily serves original equipment manufacturers and cloud-based service providers, offering a wide range of manufacturing and supply-chain solutions [3] - The company is experiencing strong growth in the AI data center market, with a 43.2% year-over-year sales increase in the Connectivity & Cloud Solutions segment [11][12] - However, Celestica's Advanced Technology segment saw a decline of 4.1% year-over-year, primarily due to elevated inventory levels in industrial end markets [13] - Celestica's current ratio is 1.47, indicating it is well-positioned to meet short-term obligations, but its quick ratio of 0.88 suggests potential challenges in fulfilling these obligations without selling inventory [15] Financial Performance - In the third quarter, Sanmina generated $1.247 billion in revenues from Industrial & Energy, Medical, Defense & Aerospace, and Automotive markets, a slight decrease from $1.253 billion [7] - Celestica generated $126.2 million in cash from operations, up from $122.8 million year-over-year, with free cash flow increasing by 15.7% [14] - Sanmina's full-year sales are expected to grow by 72.24%, while Celestica's sales are projected to grow by 26.34% [16][18] Market Position and Valuation - Over the past year, Celestica's share price has increased by 280.1%, while Sanmina's has risen by 105% [18] - From a valuation perspective, Sanmina appears more attractive, trading at a price/earnings ratio of 16.45 compared to Celestica's 42.36 [19] - Both companies hold a Zacks Rank 1 (Strong Buy), indicating strong demand across multiple verticals and resilience amid macroeconomic challenges [21]