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CLS Stock Before Q4 Earnings: A Smart Buy or Risky Investment?
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Key Takeaways
Celestica reports Q4 earnings on Jan 28, with consensus estimates calling for $3.45B in sales and $1.73 EPS.
CLS launched the SD6300 storage platform and new 1.6TbE switches, doubling capacity for AI data centers.
Celestica shares are up 174.6% year over year, but ATS softness and a premium valuation remain key risks.
Celestica, Inc. (CLS - Free Report) is scheduled to report fourth-quarter 2026 earnings on Jan. 28. The Zacks Consensus Estimate for sales and earnings is pegged at $3.45 billion and $1.73 per share, respectively. Earnings estimates for CLS have remained unchanged for 2025 and have declined 0.12% for 2026, over the past 60 days.
Image Source: Zacks Investment Research
Earnings Surprise History
The leading electronics manufacturing services firm has had a solid earnings surprise history in the trailing four quarters, exceeding earnings expectations on most occasions. It delivered a four-quarter earnings surprise of 6.92%, on average.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict a earnings beat for Celestica for the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
During the quarter, Celestica introduced a cutting-edge storage platform, the SD6300 ultra-dense storage expansion system, to cater to the exponential AI data growth across traditional enterprise and hyperscale data centers.
The SD6300 maximizes storage density per rack, enhancing floor space utilization. The solution features four dedicated SAS-4 drive bays, supporting SAS-4 solid-state drives. The SAS 4 uplink offers high-speed data connections. Owing to such innovative features, Celestica SD6300 effectively delivers cost savings while boosting the overall storage performance. It matches the density, performance and reliability requirements needed to support emerging use cases like AI data ingest and AI data archiving phases, as well as legacy applications such as data lakes, big data and analytics.
The company also introduced two new 1.6TbE data center switches, the DS6000 and DS6001, to support high-bandwidth, AI/ML data center applications. While the DS6000 is a 3RU, 64-port x 1.6TbE data center switch for traditional air-cooled data center installations, the DS6001 is a 2OU, 64-port x 1.6TbE switch offering a hybrid cooled solution based on the 21-inch OCP ORv3 rack. Together, the switches double the switching capacity of Celestica’s current offerings. Such innovations are expected to have boosted commercial prospects during the quarter.
However, the company’s top line is affected by weakness in some verticals. Elevated inventory levels in the Industrial end markets are primarily hindering net sales in the Advanced Technology Solutions (ATS) segment. Although demand has stabilized, macroeconomic challenges remain headwinds.
Price Performance
Over the past year, CLS has surged 174.2% compared with the industry’s growth of 91.6%. It has also outperformed its peers like Flex Ltd. (FLEX - Free Report) and Jabil Inc. (JBL - Free Report) over this period. Flex has gained 50.8%, and Jabil is up 52.2% over this period.
Image Source: Zacks Investment Research
Key Valuation Metric
From a valuation standpoint, Celestica appears to be trading at a premium relative to the industry and is trading above its mean. Going by the price/earnings ratio, the company’s shares currently trade at 37.35 forward earnings, higher than 25.76 for the industry and the stock’s mean of 32.56.
Image Source: Zacks Investment Research
Investment Considerations
Celestica is benefiting from healthy traction in the Connectivity & Cloud Solutions segment. Enterprises across industries are rapidly integrating AI across operations. This surge in AI workloads is pushing hyperscalers to expand their AI data center footprint. AI data centers need a robust networking architecture to support this substantial AI workload. This is driving demand for Celestica’s leading-edge 800G and 400G switching products.
The surge in AI workloads is not going to stop anytime soon. It is expected that the company will eventually start to incorporate 1.6TbE data center switches to support the AI data center requirements. Celestica is rapidly expanding its portfolio cater to this emerging market trend.
Growing geopolitical unrest worldwide has led to higher raw material purchasing costs, higher logistic costs and procurement delays. Supply chain disruptions have impacted many businesses’ operating margins. Celestica’s vertically integrated manufacturing process and diversified supply chain network allow it to mitigate the effects of geopolitical volatility and tariff-related uncertainties, increasing its reliability among major hyperscalers. Such factors bode well for long-term growth.
However, the company operates in a highly competitive AI infrastructure space. It faces competition from other major EMS players such as Jabil and Flex. The company is also exposed to significant customer concentration risks.
Its near-term revenue growth prospects are heavily reliant on AI data center capex. However, several factors, such as macroeconomic headwinds and tariff-related uncertainties, can impact investments in AI infrastructure, which can have a negative impact on Celestica’s financial results.
End Note
Celestica is set to gain from solid momentum in the communications end market, backed by growing demand for 800G and 400G switches. Growing AI proliferation across industries provides a solid growth opportunity for the company. However, the company is affected by customer concentration and weakness in the ATS segment. High reliance on AI-related investment is a concern. With a Zacks Rank #3, Celestica seems to be treading in the middle of the road, and investors could be better off if they trade with caution.
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CLS Stock Before Q4 Earnings: A Smart Buy or Risky Investment?
Key Takeaways
Celestica, Inc. (CLS - Free Report) is scheduled to report fourth-quarter 2026 earnings on Jan. 28. The Zacks Consensus Estimate for sales and earnings is pegged at $3.45 billion and $1.73 per share, respectively. Earnings estimates for CLS have remained unchanged for 2025 and have declined 0.12% for 2026, over the past 60 days.
Image Source: Zacks Investment Research
Earnings Surprise History
The leading electronics manufacturing services firm has had a solid earnings surprise history in the trailing four quarters, exceeding earnings expectations on most occasions. It delivered a four-quarter earnings surprise of 6.92%, on average.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict a earnings beat for Celestica for the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Celestica currently has an ESP of 0.00% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping Upcoming Results
During the quarter, Celestica introduced a cutting-edge storage platform, the SD6300 ultra-dense storage expansion system, to cater to the exponential AI data growth across traditional enterprise and hyperscale data centers.
The SD6300 maximizes storage density per rack, enhancing floor space utilization. The solution features four dedicated SAS-4 drive bays, supporting SAS-4 solid-state drives. The SAS 4 uplink offers high-speed data connections. Owing to such innovative features, Celestica SD6300 effectively delivers cost savings while boosting the overall storage performance. It matches the density, performance and reliability requirements needed to support emerging use cases like AI data ingest and AI data archiving phases, as well as legacy applications such as data lakes, big data and analytics.
The company also introduced two new 1.6TbE data center switches, the DS6000 and DS6001, to support high-bandwidth, AI/ML data center applications. While the DS6000 is a 3RU, 64-port x 1.6TbE data center switch for traditional air-cooled data center installations, the DS6001 is a 2OU, 64-port x 1.6TbE switch offering a hybrid cooled solution based on the 21-inch OCP ORv3 rack. Together, the switches double the switching capacity of Celestica’s current offerings. Such innovations are expected to have boosted commercial prospects during the quarter.
However, the company’s top line is affected by weakness in some verticals. Elevated inventory levels in the Industrial end markets are primarily hindering net sales in the Advanced Technology Solutions (ATS) segment. Although demand has stabilized, macroeconomic challenges remain headwinds.
Price Performance
Over the past year, CLS has surged 174.2% compared with the industry’s growth of 91.6%. It has also outperformed its peers like Flex Ltd. (FLEX - Free Report) and Jabil Inc. (JBL - Free Report) over this period. Flex has gained 50.8%, and Jabil is up 52.2% over this period.
Image Source: Zacks Investment Research
Key Valuation Metric
From a valuation standpoint, Celestica appears to be trading at a premium relative to the industry and is trading above its mean. Going by the price/earnings ratio, the company’s shares currently trade at 37.35 forward earnings, higher than 25.76 for the industry and the stock’s mean of 32.56.
Image Source: Zacks Investment Research
Investment Considerations
Celestica is benefiting from healthy traction in the Connectivity & Cloud Solutions segment. Enterprises across industries are rapidly integrating AI across operations. This surge in AI workloads is pushing hyperscalers to expand their AI data center footprint. AI data centers need a robust networking architecture to support this substantial AI workload. This is driving demand for Celestica’s leading-edge 800G and 400G switching products.
The surge in AI workloads is not going to stop anytime soon. It is expected that the company will eventually start to incorporate 1.6TbE data center switches to support the AI data center requirements. Celestica is rapidly expanding its portfolio cater to this emerging market trend.
Growing geopolitical unrest worldwide has led to higher raw material purchasing costs, higher logistic costs and procurement delays. Supply chain disruptions have impacted many businesses’ operating margins. Celestica’s vertically integrated manufacturing process and diversified supply chain network allow it to mitigate the effects of geopolitical volatility and tariff-related uncertainties, increasing its reliability among major hyperscalers. Such factors bode well for long-term growth.
However, the company operates in a highly competitive AI infrastructure space. It faces competition from other major EMS players such as Jabil and Flex. The company is also exposed to significant customer concentration risks.
Its near-term revenue growth prospects are heavily reliant on AI data center capex. However, several factors, such as macroeconomic headwinds and tariff-related uncertainties, can impact investments in AI infrastructure, which can have a negative impact on Celestica’s financial results.
End Note
Celestica is set to gain from solid momentum in the communications end market, backed by growing demand for 800G and 400G switches. Growing AI proliferation across industries provides a solid growth opportunity for the company. However, the company is affected by customer concentration and weakness in the ATS segment. High reliance on AI-related investment is a concern. With a Zacks Rank #3, Celestica seems to be treading in the middle of the road, and investors could be better off if they trade with caution.