We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Celestica vs. Flex: Which EMS Stock Has Better Growth Potential?
Read MoreHide Full Article
Key Takeaways
CLS expects 2025 sales to rise 13.1% and EPS to grow 30.1% with strong demand for AI-driven data solutions.
Flex sees 50% growth in cloud/data center power and anticipates continued strength into fiscal 2026.
FLEX trades at a lower forward P/E of 14.49 versus CLS at 22.72, making it more attractive on valuation.
Celestica Inc. (CLS - Free Report) and Flex Ltd. (FLEX - Free Report) are two leading players in the electronics manufacturing services (EMS) industry. Celestica is one of the largest EMS companies in the world, primarily serving original equipment manufacturers, cloud-based and other service providers, and business enterprises across several industries. It offers a comprehensive range of manufacturing and supply-chain solutions that support various customer requirements, from low-volume, high-complexity custom products to high-volume commodity products.
On the other hand, Singapore-based Flex offers advanced manufacturing solutions to customers through a wide array of services, including design and engineering, component services, rapid prototyping, fulfillment and circular economy solutions. The company has also expanded its service offerings in software, robotics, artificial intelligence (AI), factory automation, simulation, digital twins and other emerging technologies.
With domain-specific expertise in core areas, both Celestica and Flex are strategically positioned in the EMS landscape, serving similar markets such as cloud computing, automotive, healthcare and industrials. Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the industry.
The Case for Celestica
With more than 25 years of experience in manufacturing, backed by a simplified and optimized global network, Celestica is committed to delivering next-generation, cloud-optimized data storage and industry-leading networking solutions to help customers balance performance, power efficiency and space as technologies evolve. The company had benefited from the ongoing generative AI boom, thanks to the solid demand trends for AI/ML (machine learning) compute and networking products from hyperscale customers.
Celestica is benefiting from the 800G family of network switches, which are vital for data centers that power AI applications and storage solutions like the SC6100 controller and SD6200 platform (which provide efficient and scalable data storage for AI). This transformational solution offers a foundational technology to advance AI while maintaining scalable, sustainable and profitable business models. The data center switches combined with optical transceivers have the potential to handle and sustain high volumes of both inbound and outbound network traffic and cater to the demand for data center bandwidth for supporting AI/ML and data analytics applications. These state-of-the-art products have translated into solid top-line growth in recent years.
However, the company remains plagued by margin woes. Celestica’s products are highly sophisticated and typically based on the latest technological innovations, which have historically led to high research and development costs. High operating expenses have contracted margins. Moreover, Celestica faces stiff competition from industry giants like Foxconn, Jabil Inc. (JBL - Free Report) and Sanmina Corporation (SANM - Free Report) . The highly cyclical nature of the semiconductor industry further remains an overhang, particularly in the aftermath of reciprocal tariffs.
The Case for Flex
With a diverse workforce across 30 countries, Flex is well-positioned to cater to the evolving demands arising from the proliferation of the Internet of Things (IoT), autonomous/connected cars, industrial automation, augmented & virtual reality (AR/VR) and 5G technologies. The company’s technology and vertical integration capabilities serve many applications, like hyperscale data centers, renewables and next-generation mobility. Strategic initiatives undertaken by the company are driving growth across multiple business verticals.
In fiscal 2025, Flex’s cloud and data center power business expanded 50% from the prior-year period. The company continues to anticipate strong growth in the cloud and data center power business in fiscal 2026. Its innovative suite of power products and services enhances customer satisfaction. All these factors favorably position Flex for the AI-powered technology shift prevalent in the industry, from grid to chip and from the cloud to the edge.
However, Flex operates in a highly competitive environment, facing competition from both domestic and international electronic manufacturers, manufacturing service providers and designers like Jabil and Sanmina. The tense geopolitical situation between the United States and China and the wars in Europe and the Middle East remain headwinds. Against the backdrop of this global uncertainty, low demand in some consumer-centric markets is negatively impacting its margins.
How Do Zacks Estimates Compare for CLS & FLEX?
The Zacks Consensus Estimate for Celestica’s 2025 sales and EPS implies year-over-year growth of 13.1% and 30.1%, respectively. The EPS estimates for 2025 have been trending northward over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Flex’s 2025 sales implies a year-over-year rise of 0.4%, while that of EPS suggests growth of 9.4%. The EPS estimates for 2025 have been trending northward over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of CLS & FLEX
Over the past year, Celestica has gained 119.8% compared with the industry’s growth of 51.7%. Flex has gained 36.6% over the same period.
Image Source: Zacks Investment Research
Flex looks more attractive than Celestica from a valuation standpoint. Going by the price/earnings ratio, Flex’s shares currently trade at 14.49 forward earnings, lower than 22.72 for Celestica.
Both Celestica and Flex expect sales and profits to improve in 2025. Celestica has shown sharp revenue and EPS growth over the years, while Flex has been facing a topsy-turvy road. Celestica boasts a better price performance, but Flex’s valuation metrics appear comparatively more attractive. However, based solely on the Zacks Rank, Flex is relatively better placed than Celestica. Hence, Flex seems to be a better investment option at the moment.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Celestica vs. Flex: Which EMS Stock Has Better Growth Potential?
Key Takeaways
Celestica Inc. (CLS - Free Report) and Flex Ltd. (FLEX - Free Report) are two leading players in the electronics manufacturing services (EMS) industry. Celestica is one of the largest EMS companies in the world, primarily serving original equipment manufacturers, cloud-based and other service providers, and business enterprises across several industries. It offers a comprehensive range of manufacturing and supply-chain solutions that support various customer requirements, from low-volume, high-complexity custom products to high-volume commodity products.
On the other hand, Singapore-based Flex offers advanced manufacturing solutions to customers through a wide array of services, including design and engineering, component services, rapid prototyping, fulfillment and circular economy solutions. The company has also expanded its service offerings in software, robotics, artificial intelligence (AI), factory automation, simulation, digital twins and other emerging technologies.
With domain-specific expertise in core areas, both Celestica and Flex are strategically positioned in the EMS landscape, serving similar markets such as cloud computing, automotive, healthcare and industrials. Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the industry.
The Case for Celestica
With more than 25 years of experience in manufacturing, backed by a simplified and optimized global network, Celestica is committed to delivering next-generation, cloud-optimized data storage and industry-leading networking solutions to help customers balance performance, power efficiency and space as technologies evolve. The company had benefited from the ongoing generative AI boom, thanks to the solid demand trends for AI/ML (machine learning) compute and networking products from hyperscale customers.
Celestica is benefiting from the 800G family of network switches, which are vital for data centers that power AI applications and storage solutions like the SC6100 controller and SD6200 platform (which provide efficient and scalable data storage for AI). This transformational solution offers a foundational technology to advance AI while maintaining scalable, sustainable and profitable business models. The data center switches combined with optical transceivers have the potential to handle and sustain high volumes of both inbound and outbound network traffic and cater to the demand for data center bandwidth for supporting AI/ML and data analytics applications. These state-of-the-art products have translated into solid top-line growth in recent years.
However, the company remains plagued by margin woes. Celestica’s products are highly sophisticated and typically based on the latest technological innovations, which have historically led to high research and development costs. High operating expenses have contracted margins. Moreover, Celestica faces stiff competition from industry giants like Foxconn, Jabil Inc. (JBL - Free Report) and Sanmina Corporation (SANM - Free Report) . The highly cyclical nature of the semiconductor industry further remains an overhang, particularly in the aftermath of reciprocal tariffs.
The Case for Flex
With a diverse workforce across 30 countries, Flex is well-positioned to cater to the evolving demands arising from the proliferation of the Internet of Things (IoT), autonomous/connected cars, industrial automation, augmented & virtual reality (AR/VR) and 5G technologies. The company’s technology and vertical integration capabilities serve many applications, like hyperscale data centers, renewables and next-generation mobility. Strategic initiatives undertaken by the company are driving growth across multiple business verticals.
In fiscal 2025, Flex’s cloud and data center power business expanded 50% from the prior-year period. The company continues to anticipate strong growth in the cloud and data center power business in fiscal 2026. Its innovative suite of power products and services enhances customer satisfaction. All these factors favorably position Flex for the AI-powered technology shift prevalent in the industry, from grid to chip and from the cloud to the edge.
However, Flex operates in a highly competitive environment, facing competition from both domestic and international electronic manufacturers, manufacturing service providers and designers like Jabil and Sanmina. The tense geopolitical situation between the United States and China and the wars in Europe and the Middle East remain headwinds. Against the backdrop of this global uncertainty, low demand in some consumer-centric markets is negatively impacting its margins.
How Do Zacks Estimates Compare for CLS & FLEX?
The Zacks Consensus Estimate for Celestica’s 2025 sales and EPS implies year-over-year growth of 13.1% and 30.1%, respectively. The EPS estimates for 2025 have been trending northward over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Flex’s 2025 sales implies a year-over-year rise of 0.4%, while that of EPS suggests growth of 9.4%. The EPS estimates for 2025 have been trending northward over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of CLS & FLEX
Over the past year, Celestica has gained 119.8% compared with the industry’s growth of 51.7%. Flex has gained 36.6% over the same period.
Image Source: Zacks Investment Research
Flex looks more attractive than Celestica from a valuation standpoint. Going by the price/earnings ratio, Flex’s shares currently trade at 14.49 forward earnings, lower than 22.72 for Celestica.
Image Source: Zacks Investment Research
CLS or FLEX: Which is a Better Pick?
While Celestica carries a Zacks Rank #3 (Hold), Flex has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both Celestica and Flex expect sales and profits to improve in 2025. Celestica has shown sharp revenue and EPS growth over the years, while Flex has been facing a topsy-turvy road. Celestica boasts a better price performance, but Flex’s valuation metrics appear comparatively more attractive. However, based solely on the Zacks Rank, Flex is relatively better placed than Celestica. Hence, Flex seems to be a better investment option at the moment.