It has been about a month since the last earnings report for Celestica (CLS Quick QuoteCLS - Free Report) . Shares have added about 2.6% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Celestica due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Celestica, Inc. before we dive into how investors and analysts have reacted as of late.

Celestica Surpasses Q1 Earnings Estimates on Solid CCS Demand

Celestica's first-quarter 2026 adjusted earnings were $2.16 per share, which surged 80% year over year, and topped the Zacks Consensus Estimate by 3.9%. Revenues climbed 52.8% to $4.047 billion and outpaced the consensus mark by 0.8%.

Momentum in Connectivity & Cloud Solutions (CCS) remained the key catalyst. CCS segment revenue rose 76% year over year to $3.24 billion, reflecting accelerating demand from the company’s data center-focused customer base.

CLS Profitability Improves as Operating Leverage Builds

GAAP net earnings were $212.3 million or $1.83 per share compared with $86.2 million or 74 cents per share in the year-ago quarter, reflecting the benefit of significantly higher scale. 

Operating performance also strengthened. GAAP earnings from operations were $272.1 million, with operating margin improving to 6.7% from 4.9% in the prior-year quarter as profitability expanded alongside the top-line ramp.

Celestica Margins Expand on Better Mix

Adjusted operating earnings increased to $325.2 million, taking the adjusted operating margin to 8% from 7.1% in the year-ago quarter. The margin expansion underscores management’s point on improving profitability across both operating segments.

Higher spending accompanied the growth cycle. Research and development expense rose to $41.2 million from $17.6 million a year ago, aligning with Celestica’s push to deepen its engineering and platform capabilities to support advanced data center programs.

CLS Hardware Platform Solutions Accelerate in CCS

Within CCS, segment margin improved to 8.6% from 8% in the first quarter of 2025, supported by favorable operating leverage and improved mix. Management noted continued acceleration across its CCS customer base alongside increasing profitability in the segment.

Hardware Platform Solutions revenue was approximately $1.7 billion, up 63% year over year, reflecting growing demand tied to data center infrastructure programs. The company also highlighted a hyperscaler award for a co-packaged optics Ethernet switch program optimized for AI scale-out networks, with production expected to begin ramping in 2027.

Celestica’s ATS Revenues Flat, Margin Jumps

Advanced Technology Solutions (ATS) revenue was $0.81 billion, remaining relatively flat year over year, indicating steadier demand conditions outside the faster-growing data center buildout. Even with muted top-line growth, ATS’ profitability improved.

ATS segment margin rose to 6% from 5% in the year-ago quarter. The margin improvement suggests more efficient execution and better profitability across the segment’s diversified end markets.

CLS Cash Generation Offsets Heavy Investment Needs

Celestica generated $356.3 million in cash from operating activities, up from $130.3 million a year ago. Stronger earnings and working-capital dynamics supported the step-up in operating cash flow.

Investment spending increased meaningfully. Purchases of property, plant and equipment (net of sales proceeds) were $218.4 million, resulting in free cash flow of $137.9 million versus $93.6 million in the prior-year quarter. Cash and cash equivalents at the end of the quarter were $378 million, while long-term borrowings under the credit facility and finance lease obligations were $746.5 million.

Celestica Guides Q2 Growth and Lifts 2026 Outlook

For the second quarter of 2026, Celestica expects revenues between $4.15 billion and $4.45 billion. Adjusted earnings are projected in the range of $2.14 to $2.34 per share, with adjusted operating margin expected to be about 8% at the midpoint of the revenue and adjusted earnings ranges.

Management also raised its 2026 annual outlook. The company now expects revenue of $19 billion (up from $17 billion expected earlier), adjusted earnings of $10.15 per share (up from $8.75) and adjusted operating margin of 8.1% (up from 7.8%), while maintaining its prior free cash flow outlook of $500 million. Celestica amended and upsized its senior secured credit agreement to approximately $2.5 billion, including an increase in revolver commitments to $1.75 billion and an extension of maturity to April 2031. 

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in estimates review.

The consensus estimate has shifted 6.22% due to these changes.

VGM Scores

Currently, Celestica has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a score of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Celestica has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.