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Celestica Outperforms Industry Year to Date: Reason to Buy the Stock?
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Key Takeaways
Celestica has surged 103.4% YTD, outpacing its industry, sector peers, and the S&P 500.
Celestica is expanding in AI infrastructure portfolio with new next-generation storage solutions.
Earnings estimates for 2025 and 2026 have been moving northward over the past 60 days.
Celestica, Inc. (CLS - Free Report) has surged 103.4% in the year-to-date period compared with the Electronics - Manufacturing Services industry’s growth of 57.5%. The stock has outperformed the Zacks Computer & Technology sector and the S&P 500 during the same time frame.
Image Source: Zacks Investment Research
The company has outperformed its peers like Jabil, Inc. (JBL - Free Report) and Flex Ltd (FLEX - Free Report) . Shares of Jabil have jumped 45.2%, and shares of Flex have risen 30%.
CLS Rides on Strong Demand Trends, AI Focus
Celestica is benefiting from healthy demand trends in the Connectivity & Cloud Solutions (CCS) segment. During the second quarter, the CCS segment revenues rose 28% year over year to $2.07 billion. The growth is primarily backed by strength in Hyperscaler Portfolio Solutions (HPS) networking business and optical programs. The company’s HPS business registered an impressive 82% year-over-year increase, generating $1.2 billion in revenues backed by growing demand for 800G networking switches. Demand for 400G switches also remains strong. The company is expected to generate 30% year-over-year revenue growth from the CCS segment in 2025. Despite weakness in some verticals, the ATS (Advanced Technology Solutions) segment is benefiting from healthy traction in the aerospace and defense end market.
Celestica has established itself as a dominant player in the rapidly expanding AI infrastructure market. Per Grandview Research, the AI infrastructure market is projected to reach $223.45 billion by 2030 with a compound annual growth rate of 30.4% from 2024 to 2030. Celestica is rapidly expanding its portfolio offering to capitalize on this market trend.
Celestica’s recently introduced SC6110, a next-generation 2U dual node, all-flash storage controller, engineered to support mission-critical enterprise applications like AI infrastructure, high-performance computing, core business applications, such as database, online transaction processing, and file sharing. Powered by AMD EPYC™ Embedded 9004 Series, the solution delivers remarkable performance, efficiency, and optimizes energy usage while supporting highly demanding enterprise workloads. Management’s strong focus on innovation augurs well for long-term growth.
Robust Liquidity & Cash Flow are Positives
Celestica’s strong liquidity better positions it to navigate economic downturns and capitalize on emerging growth opportunities in the electronics manufacturing service industry. As of June 30, 2025, the company had $313.8 million in cash and cash equivalents, with the long-term portion of borrowings under the credit facility and finance lease obligations of $848.6 million. At the end of the second quarter of 2025, CLS reported a current ratio of 1.44, higher than the industry's average of 1.15. A current ratio above 1 suggests that a company is well-positioned to meet its short-term obligations.
In the second quarter of 2025, Celestica generated $152.4 million in cash from operations compared with $99.6 million in the year-ago quarter. Free cash flow was $119.9 million, up 82.8% year over year. This accentuates efficient capital management and implies that the company is well-positioned to invest in growth initiatives, as well as pay debt and dividends.
Estimate Revision Trend
Earnings estimates for Celestica for 2025 and 2026 have increased over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of CLS
From a valuation standpoint, CLS is currently trading at a premium compared to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 30.91 forward 12-month earnings, higher than 22.59 for the industry.
Image Source: Zacks Investment Research
End Note
Celestica is set to benefit from high growth in the AI networking infrastructure market. A globally diversified manufacturing network is allowing CLS to mitigate geopolitical risks and tariff-related uncertainties. Strategic relationships with leading hyperscaler customers are tailwinds. Collaborations with other industry leaders, such as AMD and Broadcom, are boosting portfolio strength. This is allowing the company to gain a competitive edge against its other peers in the Electronic Manufacturing Industry, such as Jabil, Flex and Foxconn. Upward estimate revision underscores growing investors’ confidence. With a robust portfolio, Celestica is well-positioned to gain from emerging market dynamics. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Celestica Outperforms Industry Year to Date: Reason to Buy the Stock?
Key Takeaways
Celestica, Inc. (CLS - Free Report) has surged 103.4% in the year-to-date period compared with the Electronics - Manufacturing Services industry’s growth of 57.5%. The stock has outperformed the Zacks Computer & Technology sector and the S&P 500 during the same time frame.
Image Source: Zacks Investment Research
The company has outperformed its peers like Jabil, Inc. (JBL - Free Report) and Flex Ltd (FLEX - Free Report) . Shares of Jabil have jumped 45.2%, and shares of Flex have risen 30%.
CLS Rides on Strong Demand Trends, AI Focus
Celestica is benefiting from healthy demand trends in the Connectivity & Cloud Solutions (CCS) segment. During the second quarter, the CCS segment revenues rose 28% year over year to $2.07 billion. The growth is primarily backed by strength in Hyperscaler Portfolio Solutions (HPS) networking business and optical programs. The company’s HPS business registered an impressive 82% year-over-year increase, generating $1.2 billion in revenues backed by growing demand for 800G networking switches. Demand for 400G switches also remains strong. The company is expected to generate 30% year-over-year revenue growth from the CCS segment in 2025. Despite weakness in some verticals, the ATS (Advanced Technology Solutions) segment is benefiting from healthy traction in the aerospace and defense end market.
Celestica has established itself as a dominant player in the rapidly expanding AI infrastructure market. Per Grandview Research, the AI infrastructure market is projected to reach $223.45 billion by 2030 with a compound annual growth rate of 30.4% from 2024 to 2030. Celestica is rapidly expanding its portfolio offering to capitalize on this market trend.
Celestica’s recently introduced SC6110, a next-generation 2U dual node, all-flash storage controller, engineered to support mission-critical enterprise applications like AI infrastructure, high-performance computing, core business applications, such as database, online transaction processing, and file sharing. Powered by AMD EPYC™ Embedded 9004 Series, the solution delivers remarkable performance, efficiency, and optimizes energy usage while supporting highly demanding enterprise workloads. Management’s strong focus on innovation augurs well for long-term growth.
Robust Liquidity & Cash Flow are Positives
Celestica’s strong liquidity better positions it to navigate economic downturns and capitalize on emerging growth opportunities in the electronics manufacturing service industry. As of June 30, 2025, the company had $313.8 million in cash and cash equivalents, with the long-term portion of borrowings under the credit facility and finance lease obligations of $848.6 million. At the end of the second quarter of 2025, CLS reported a current ratio of 1.44, higher than the industry's average of 1.15. A current ratio above 1 suggests that a company is well-positioned to meet its short-term obligations.
In the second quarter of 2025, Celestica generated $152.4 million in cash from operations compared with $99.6 million in the year-ago quarter. Free cash flow was $119.9 million, up 82.8% year over year. This accentuates efficient capital management and implies that the company is well-positioned to invest in growth initiatives, as well as pay debt and dividends.
Estimate Revision Trend
Earnings estimates for Celestica for 2025 and 2026 have increased over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of CLS
From a valuation standpoint, CLS is currently trading at a premium compared to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 30.91 forward 12-month earnings, higher than 22.59 for the industry.
Image Source: Zacks Investment Research
End Note
Celestica is set to benefit from high growth in the AI networking infrastructure market. A globally diversified manufacturing network is allowing CLS to mitigate geopolitical risks and tariff-related uncertainties. Strategic relationships with leading hyperscaler customers are tailwinds. Collaborations with other industry leaders, such as AMD and Broadcom, are boosting portfolio strength. This is allowing the company to gain a competitive edge against its other peers in the Electronic Manufacturing Industry, such as Jabil, Flex and Foxconn. Upward estimate revision underscores growing investors’ confidence. With a robust portfolio, Celestica is well-positioned to gain from emerging market dynamics. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.