Celestica (CLS) AI Stock Analysis

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TSE:CLS Dividends

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Celestica

(TSX:CLS)

72Outperform

Celestica's strong financial performance, highlighted by impressive revenue growth and profitability, is a significant strength. The positive earnings call outlook further supports this. However, the technical analysis suggests caution due to mixed indicators and valuation concerns, which moderate the overall score. The absence of significant corporate events means the stock's performance is primarily driven by its financial and operational results.

Positive Factors

AI Infrastructure Investments

Celestica's strong relationships with major hyperscalers position it to benefit from tailwinds relative to AI infrastructure investments and drive strong revenue growth.

ODMs High Growth

Investments in ODM capabilities are bearing fruit in the form of high growth in high-margin HPS revenues.

Negative Factors

High Valuation

Shares are trading at a high valuation compared to historical averages, indicating limited upside potential.

One-time Contract Loss

Celestica's Advanced Technology Solutions faces a revenue reset following a one-time contract loss.

Revenue Headwind

The technology transition in an AI/ML compute program with its largest customer remains on track but is expected to continue to be a year-over-year headwind through the first half of the year.

Celestica (CLS) vs. S&P 500 (SPY)

Market Cap

$13.53B

Dividend YieldN/A

Average Volume (3M)935.31K

Price to Earnings (P/E)23.6

Beta (1Y)1.90

Revenue Growth24.94%

EPS Growth42.45%

CountryCA

Employees21,914

SectorTechnology

Sector Strength65

IndustryHardware, Equipment & Parts

Share Statistics

EPS (TTM)4.98

Shares Outstanding114,991,980

10 Day Avg. Volume839,573

30 Day Avg. Volume935,313

Financial Highlights & Ratios

PEG Ratio0.56

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.76

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit10.00

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$166.03

Price Target Upside34.42% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering8

Celestica Business Overview & Revenue Model

Company DescriptionCelestica Inc. (CLS) is a Canadian multinational company operating in the electronics manufacturing services (EMS) industry. The company provides a wide range of design, manufacturing, and supply chain solutions to various sectors, including aerospace and defense, healthcare, industrial, semiconductor, and smart energy. Celestica's core services include product lifecycle management, engineering services, and after-market services, helping its customers bring innovative products to market faster and more efficiently.

How the Company Makes MoneyCelestica makes money primarily through its electronics manufacturing services, which involve designing, building, testing, and distributing electronic components and assemblies. The company's revenue model is centered around long-term contracts with clients in diverse industries such as aerospace, healthcare, and industrial sectors. Key revenue streams include product manufacturing, supply chain management, and engineering services. Celestica also leverages strategic partnerships with leading technology companies to enhance its service offerings and expand its market reach. By providing end-to-end solutions across the product lifecycle, Celestica helps its clients optimize their operations, reduce costs, and improve time-to-market, which in turn drives the company's earnings.

Celestica Financial Statement Overview

Summary

Celestica's financial performance is strong, with impressive revenue growth and profitability as evidenced by a 30.5% revenue increase from 2023 to 2024. The company maintains a stable balance sheet with moderate leverage and effective cash flow generation, ensuring financial flexibility.

Income Statement

Very Positive

Celestica's income statement demonstrates robust growth and profitability. The TTM (Trailing-Twelve-Months) Gross Profit Margin is 10.7%, showing a stable ability to generate profit from revenue. The Net Profit Margin for TTM is 4.1%, reflecting consistent profitability. Revenue growth is strong, with a 30.5% increase from 2023 to 2024 and a 21.2% increase from 2022 to 2023, indicating impressive top-line expansion. The EBIT and EBITDA margins are solid at 5.9% and 7.2% respectively for TTM, showcasing efficient operational performance.

Balance Sheet

Positive

Celestica's balance sheet reveals a stable financial structure with manageable leverage. The Debt-to-Equity Ratio is 0.61, indicating moderate leverage which is typical for the industry. The Return on Equity (ROE) is strong at 26.5% for TTM, signifying effective use of equity financing to generate profits. The Equity Ratio stands at 26.7%, which shows a reasonable proportion of equity financing compared to total assets. Overall, the company maintains a healthy balance between debt and equity.

Cash Flow

Positive

The cash flow statements indicate a strong cash-generating ability. The Free Cash Flow Growth Rate shows a positive trajectory with a 0.96% increase from 2023 to 2024. The Operating Cash Flow to Net Income Ratio for TTM is 1.15, highlighting effective cash generation relative to profit. Furthermore, the Free Cash Flow to Net Income Ratio is 0.74, showing a good conversion of income into cash flow, supporting future investments and financial flexibility.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
9.65B	7.96B	7.25B	5.63B	5.75B
	Gross Profit
1.03B	778.50M	636.30M	487.00M	437.60M
	EBIT
599.30M	383.20M	263.30M	167.70M	127.90M
	EBITDA
736.20M	515.70M	408.10M	294.00M	252.60M
	Net Income Common Stockholders
428.00M	244.60M	145.50M	103.90M	60.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
423.30M	372.60M	374.50M	394.00M	463.80M
	Total Assets
5.99B	5.89B	5.63B	4.67B	3.66B
	Total Debt
796.70M	782.80M	786.10M	794.40M	585.90M
	Net Debt
373.40M	412.40M	411.60M	400.40M	122.10M
	Total Liabilities
4.09B	4.12B	3.95B	3.20B	2.26B
	Stockholders Equity
1.90B	1.77B	1.68B	1.46B	1.41B
Cash Flow		Free Cash Flow
303.00M	304.60M	188.90M	174.60M	186.80M
	Operating Cash Flow
473.90M	429.70M	297.90M	226.80M	239.60M
	Investing Cash Flow
-212.50M	-122.40M	-108.90M	-364.30M	-51.00M
	Financing Cash Flow
-208.50M	-311.40M	-208.50M	67.70M	-204.30M

Celestica Technical Analysis

Technical Analysis Sentiment

Positive

Last Price123.51

Price Trends

50DMA

126.14

Negative

100DMA

140.93

Negative

200DMA

112.47

Positive

Market Momentum

MACD

-0.76

Negative

RSI

52.73

Neutral

STOCH

50.36

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CLS, the sentiment is Positive. The current price of 123.51 is above the 20-day moving average (MA) of 113.02, below the 50-day MA of 126.14, and above the 200-day MA of 112.47, indicating a neutral trend. The MACD of -0.76 indicates Negative momentum. The RSI at 52.73 is Neutral, neither overbought nor oversold. The STOCH value of 50.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CLS.

Celestica Risk Analysis

Celestica disclosed 62 risk factors in its most recent earnings report. Celestica reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Celestica Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ET	77 Outperform	C$776.88M	12.93	22.71%	7.20%	-4.64%	-19.57%
MDA	75 Outperform	C$3.29B	40.82	7.09%	―	33.74%	61.09%
CLS	72 Outperform	$13.53B	23.61	25.87%	―	24.94%	42.45%
ENGH	72 Outperform	$1.32B	15.55	14.76%	4.21%	8.11%	15.83%
KXS	68 Neutral	C$5.23B	157.81	-0.10%	―	14.85%	-105.25%
Sector *	59 Neutral	$10.75B	10.37	-6.64%	3.00%	7.30%	-12.02%
BB	50 Neutral	$2.62B	―	-7.59%	―	-31.15%	30.02%

* Technology Sector Average

Performance Comparison

TSE:CLS

Celestica

123.51

62.14

101.25%

TSE:BB

BlackBerry

4.67

0.66

16.46%

TSE:ENGH

Enghouse Systems

25.03

-3.93

-13.57%

TSE:KXS

Kinaxis Inc

186.59

35.21

23.26%

TSE:ET

Evertz Technologies

10.92

-1.96

-15.22%

TSE:MDA

MDA Ltd

26.84

12.20

83.33%

Celestica Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: -3.02%|

Next Earnings Date:Jul 28, 2025

Earnings Call Sentiment Positive

The earnings call reflected a strong start to 2025 with record revenue and EPS, driven by robust performance in the CCS segment and strategic demand planning. However, challenges were noted in the enterprise segment due to technology transitions and in the ATS segment, partly due to macroeconomic uncertainties. Despite these challenges, the company maintains a positive outlook for the year.

Q1-2025 Updates

Positive Updates

Record Q1 Revenue and EPS

Celestica achieved Q1 2025 revenues of $2.65 billion and adjusted EPS of $1.20, both exceeding the high-end of their guidance ranges.

Highest Adjusted Operating Margin

The company reported an adjusted operating margin of 7.1%, marking the highest performance in its history.

Strong CCS Segment Performance

The CCS segment revenue was $1.84 billion, up 28%, driven by strong demand for networking switches, particularly from hyperscaler customers.

Positive Annual Outlook Revision

Celestica raised its annual revenue outlook to $10.85 billion and non-GAAP adjusted EPS to $5, reflecting 12% year-over-year growth.

Robust Free Cash Flow

Celestica generated $94 million of free cash flow in Q1, $26 million higher than the prior year period.

Negative Updates

Enterprise Revenue Decline

Revenue in the enterprise end market was 39% lower year-over-year, attributed to a technology transition in an AI/ML compute program.

ATS Segment Challenges

ATS segment revenue was up only 5%, with concerns over macroeconomic slowdown impacting the outlook.

Inventory and Cash Flow Challenges

Inventory balance increased sequentially, and cash deposits were down $40 million sequentially and $248 million year-over-year.

Company Guidance

In the Celestica Q1 2025 earnings call, the company provided robust guidance, highlighting several key financial metrics and expectations for the upcoming quarters. The first quarter saw revenues of $2.65 billion and an adjusted EPS of $1.20, both exceeding high-end guidance ranges. The adjusted operating margin reached a historic high at 7.1%, with the CCS segment contributing 70% of revenue at $1.84 billion, reflecting a 28% increase, and the ATS segment contributing 30% with $807 million, marking a 5% rise. The adjusted gross margin stood at 11%, while the adjusted ROIC improved by 770 basis points to 31.5%. Looking ahead, Celestica anticipates Q2 2025 revenues between $2.575 billion and $2.725 billion, with an adjusted EPS between $1.17 and $1.27. For the full year, revenue expectations have been raised to $10.85 billion with a non-GAAP adjusted EPS of $5. The company continues to expect a free cash flow of $350 million, with the adjusted effective tax rate for Q2 projected at 20%.

Celestica Corporate Events

Financial Disclosures

Celestica Surpasses Q1 2025 Expectations and Raises Annual Outlook

Positive

Apr 24, 2025

Celestica Inc. reported strong financial results for the first quarter of 2025, with revenue reaching $2.65 billion, a 20% increase from the previous year, and adjusted EPS of $1.20, both exceeding the company’s guidance ranges. The company also raised its annual outlook for 2025, expecting revenue to reach $10.85 billion and adjusted EPS to rise to $5.00, reflecting a positive demand outlook from its CCS customers and a record-high adjusted operating margin.

Spark’s Take on TSE:CLS Stock

According to Spark, TipRanks’ AI Analyst, TSE:CLS is a Outperform.

Celestica’s strong financial performance and positive earnings call outlook are the main drivers of its stock score. However, technical indicators suggest caution, and valuation metrics show some concern. The absence of significant corporate events means the stock’s performance is mainly reliant on its financial and operational performance.

To see Spark’s full report on TSE:CLS stock, click here.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.