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COMM vs. CLS: Which Networking Equipment Stock Has More Upside Ahead?
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Key Takeaways
CommScope focuses on core operations after divesting Home Networks and acquiring Casa Systems' cable assets.
Celestica benefits from AI-driven demand and a broad customer base spanning multiple high-value industries.
Celestica's 2025 sales and EPS growth outpace CommScope's, though its valuation remains relatively higher.
CommScope Holding Company, Inc. (COMM - Free Report) and Celestica Inc. (CLS - Free Report) are leading players in the communications and networking hardware space. CommScope provides comprehensive networking solutions designed to support wireline and wireless network convergence, which are essential for the success of 5G technology. Its product portfolio has been specifically designed to help global service providers efficiently deploy fiber networks.
Celestica is one of the largest firms in the electronics manufacturing services (EMS) industry, 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.
Both CommScope and Celestica are strategically positioned in the infrastructure market with overlapping relevance in networking infrastructure, enterprise IT solutions and cloud/data-center ecosystems. 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 COMM
CommScope continues to benefit from stringent cost-cutting measures and a focus on core operations. The company is actively pruning its non-core businesses while focusing on inorganic growth to boost its portfolio strength. It aims to remain at the forefront of technological innovation by developing solutions to support wireline and wireless network convergence.
The company has completed the divestiture of its Home Networks business to Vantiva SA (formerly Technicolor SA) to focus more on core operations. CommScope has further strengthened its portfolio by acquiring Casa Systems' Cable Business assets. The acquisition enhanced CommScope’s market-leading position in Access Network Solutions. It bolstered its virtual CMTS (Cable Modem Termination Systems) and PON (Passive Optical Network) product offerings, bringing significant synergies to the company’s operations. This move aligned with CommScope's strategy to expand its technological capabilities and customer base, especially in the domain of cloud-native network solutions.
Moreover, CommScope has revolutionized the way network operators scale their operations by launching the HX6-611-6WH/B antenna, which provides a high-capacity microwave backhaul solution to meet future network demands. By operating seamlessly in both the 6 GHz and 11 GHz bands, the HX6-611-6WH/B ensures reliable, long-haul connectivity, making it a critical asset for mobile network operators looking to future-proof their infrastructure.
However, CommScope sees fierce competition in each of its served markets. It is facing stiff competition from industry giants like Amphenol Corporation (APH - Free Report) and Corning Incorporated (GLW - Free Report) . The growing tension between the United States and China relating to trade restrictions on the sale of communication equipment to China-based firms has dented the industry’s credibility, leading to a loss of business. Volatility in prices of raw materials and related components is also adversely impacting the company’s profitability.
The Case for CLS
With more than two decades 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 growing proliferation of AI-based applications and generative AI tools is fueling solid AI investments across the technology ecosystem. This, in turn, is driving demand for Celestica’s enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and servers and storage-related products.
Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic goods and highly complex technology infrastructure products for a wide range of industries, including communication, healthcare, aerospace and defense, energy, semiconductor and various cloud-based and other service providers. Such a diverse customer base enhances business resilience by reducing dependence on a single industry and minimizing the effects on financial results from an economic downturn in a specific sector.
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, Flex and Sanmina Corporation (SANM - Free Report) . The highly cyclical nature of the semiconductor industry further remains an overhang, particularly in the aftermath of the tariff war.
How Do Zacks Estimates Compare for COMM & CLS?
The Zacks Consensus Estimate for CommScope’s 2025 sales and EPS implies year-over-year growth of 11.2% and 4,400%, respectively. The EPS estimates have been trending downward (0.8%) over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Celestica’s 2025 sales and EPS implies year-over-year growth of 20.6% and 43%, respectively. The EPS estimates have remained flat over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of COMM & CLS
Over the past year, COMM has surged 170.4% compared with the industry’s growth of 85.9%. Celestica has skyrocketed 324.1% over the same period.
Image Source: Zacks Investment Research
CommScope looks more attractive than Celestica from a valuation standpoint. Going by the price/earnings ratio, CommScope’s shares currently trade at 10.04 forward earnings, significantly lower than Celestica’s 38.01.
Both companies expect their sales and profits to improve in 2025. Celestica has a better price performance compared with CommScope, but is relatively expensive in terms of the valuation metric. CLS has shown steady revenue and EPS growth for the past few years, while CommScope has been facing a bumpy road. With a better Zacks Rank and fast-track growth in high-demand businesses, Celestica seems to hold an edge in most operating metrics and appears to be a better investment option at the moment.
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COMM vs. CLS: Which Networking Equipment Stock Has More Upside Ahead?
Key Takeaways
CommScope Holding Company, Inc. (COMM - Free Report) and Celestica Inc. (CLS - Free Report) are leading players in the communications and networking hardware space. CommScope provides comprehensive networking solutions designed to support wireline and wireless network convergence, which are essential for the success of 5G technology. Its product portfolio has been specifically designed to help global service providers efficiently deploy fiber networks.
Celestica is one of the largest firms in the electronics manufacturing services (EMS) industry, 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.
Both CommScope and Celestica are strategically positioned in the infrastructure market with overlapping relevance in networking infrastructure, enterprise IT solutions and cloud/data-center ecosystems. 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 COMM
CommScope continues to benefit from stringent cost-cutting measures and a focus on core operations. The company is actively pruning its non-core businesses while focusing on inorganic growth to boost its portfolio strength. It aims to remain at the forefront of technological innovation by developing solutions to support wireline and wireless network convergence.
The company has completed the divestiture of its Home Networks business to Vantiva SA (formerly Technicolor SA) to focus more on core operations. CommScope has further strengthened its portfolio by acquiring Casa Systems' Cable Business assets. The acquisition enhanced CommScope’s market-leading position in Access Network Solutions. It bolstered its virtual CMTS (Cable Modem Termination Systems) and PON (Passive Optical Network) product offerings, bringing significant synergies to the company’s operations. This move aligned with CommScope's strategy to expand its technological capabilities and customer base, especially in the domain of cloud-native network solutions.
Moreover, CommScope has revolutionized the way network operators scale their operations by launching the HX6-611-6WH/B antenna, which provides a high-capacity microwave backhaul solution to meet future network demands. By operating seamlessly in both the 6 GHz and 11 GHz bands, the HX6-611-6WH/B ensures reliable, long-haul connectivity, making it a critical asset for mobile network operators looking to future-proof their infrastructure.
However, CommScope sees fierce competition in each of its served markets. It is facing stiff competition from industry giants like Amphenol Corporation (APH - Free Report) and Corning Incorporated (GLW - Free Report) . The growing tension between the United States and China relating to trade restrictions on the sale of communication equipment to China-based firms has dented the industry’s credibility, leading to a loss of business. Volatility in prices of raw materials and related components is also adversely impacting the company’s profitability.
The Case for CLS
With more than two decades 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 growing proliferation of AI-based applications and generative AI tools is fueling solid AI investments across the technology ecosystem. This, in turn, is driving demand for Celestica’s enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and servers and storage-related products.
Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic goods and highly complex technology infrastructure products for a wide range of industries, including communication, healthcare, aerospace and defense, energy, semiconductor and various cloud-based and other service providers. Such a diverse customer base enhances business resilience by reducing dependence on a single industry and minimizing the effects on financial results from an economic downturn in a specific sector.
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, Flex and Sanmina Corporation (SANM - Free Report) . The highly cyclical nature of the semiconductor industry further remains an overhang, particularly in the aftermath of the tariff war.
How Do Zacks Estimates Compare for COMM & CLS?
The Zacks Consensus Estimate for CommScope’s 2025 sales and EPS implies year-over-year growth of 11.2% and 4,400%, respectively. The EPS estimates have been trending downward (0.8%) over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Celestica’s 2025 sales and EPS implies year-over-year growth of 20.6% and 43%, respectively. The EPS estimates have remained flat over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of COMM & CLS
Over the past year, COMM has surged 170.4% compared with the industry’s growth of 85.9%. Celestica has skyrocketed 324.1% over the same period.
Image Source: Zacks Investment Research
CommScope looks more attractive than Celestica from a valuation standpoint. Going by the price/earnings ratio, CommScope’s shares currently trade at 10.04 forward earnings, significantly lower than Celestica’s 38.01.
Image Source: Zacks Investment Research
COMM or CLS: Which is a Better Pick?
CommScope has a Zacks Rank #3 (Hold), while Celestica carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both companies expect their sales and profits to improve in 2025. Celestica has a better price performance compared with CommScope, but is relatively expensive in terms of the valuation metric. CLS has shown steady revenue and EPS growth for the past few years, while CommScope has been facing a bumpy road. With a better Zacks Rank and fast-track growth in high-demand businesses, Celestica seems to hold an edge in most operating metrics and appears to be a better investment option at the moment.