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CLS Stock Lags Industry in Three Months: A Great Opportunity to Buy?
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Key Takeaways
CLS rose 13.1% in three months, lagging the industry, Flex and Jabil amid margin and ATS pressures.
AI/ML compute and networking demand from hyperscale customers is supporting Celestica's portfolio.
Estimates for Celestica's 2026 and 2027 earnings have climbed sharply, reflecting bullish sentiment.
Celestica Inc. (CLS - Free Report) has soared 13.1% over the past three months, underperforming the industry’s growth of 24.7%. It has also lagged its peers, such as Flex Ltd. (FLEX - Free Report) and Jabil Inc. (JBL - Free Report) . While Jabil has gained 25.1%, Flex has surged 100.6% over this period.
Three-Month CLS Stock Price Performance
Image Source: Zacks Investment Research
What Ails CLS?
CLS remains plagued by margin woes. The company’s products are highly sophisticated and are typically based on the latest technological innovations, which have historically led to high research and development costs. High operating expenses have contracted margins. This has dented CLS’ prospects to some extent.
Moreover, Celestica faces stiff competition from industry giants like Foxconn, Jabil, Flex and Sanmina Corporation. Apart from this, several smaller companies operating at a regional level also intensify competition. The highly cyclical nature of the semiconductor industry further remains an overhang.
In addition, persistent weakness in the ATS segment over the past few quarters is a concern. Elevated inventory levels in the industrial end markets are primarily hindering net sales growth in this segment. The company remains skeptical of the dynamic macro environment owing to trade policy uncertainty and the fluid business environment amid a challenging macroeconomic environment.
Image Source: Zacks Investment Research
Portfolio Strength Aids CLS
Despite the recent blip, Celestia has been benefiting from the ongoing generative AI boom, driven by solid demand trends for AI/ML compute and networking products from hyperscale customers. AI investments are driving demand for its 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 a positive. Its strong research and development foundations allow it to produce high-volume electronic products and highly complex technology infrastructure products for a wide range of industries. The company continuously enhances its manufacturing, engineering, design, quality and supply-chain capabilities while developing trusted relationships with leading customers. This strategy has augmented its market penetration in each of the markets it serves.
Its customer base includes several leading manufacturers from multiple 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 one specific sector.
Estimate Revision Trend
Earnings estimates for Celestia for 2026 have moved up 50.7% to $10.16 over the past year, while the same for 2027 have jumped 81.8% to $14.6 since July 2025. The positive estimate revision depicts bullish sentiments for the stock.
Image Source: Zacks Investment Research
End Note
With a diverse portfolio of products that form an integral part of AI applications, Celestica’s remarkable transformation in recent years offers a competitive edge across the broader technology market. The company is well poised for sustained growth over the years, backed by its robust infrastructure investments, solid technology know-how and wide industry experience. As the company scales up production volumes and costs go down, possible uses for silicon photonics are likely to soar across several industries, including automotive, data center and high-performance computing, telecommunications, medical, aerospace and defense. Moreover, with improving earnings estimates, the stock is witnessing a positive investor perception.
However, with a Zacks Rank #3 (Hold), Celestica appears to be taking a middle-of-the-road approach, and new investors could be better off trading with caution. High operating expenses and stiff competitive pressure remain potent headwinds for the company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
CLS Stock Lags Industry in Three Months: A Great Opportunity to Buy?
Key Takeaways
Celestica Inc. (CLS - Free Report) has soared 13.1% over the past three months, underperforming the industry’s growth of 24.7%. It has also lagged its peers, such as Flex Ltd. (FLEX - Free Report) and Jabil Inc. (JBL - Free Report) . While Jabil has gained 25.1%, Flex has surged 100.6% over this period.
Three-Month CLS Stock Price Performance
Image Source: Zacks Investment Research
What Ails CLS?
CLS remains plagued by margin woes. The company’s products are highly sophisticated and are typically based on the latest technological innovations, which have historically led to high research and development costs. High operating expenses have contracted margins. This has dented CLS’ prospects to some extent.
Moreover, Celestica faces stiff competition from industry giants like Foxconn, Jabil, Flex and Sanmina Corporation. Apart from this, several smaller companies operating at a regional level also intensify competition. The highly cyclical nature of the semiconductor industry further remains an overhang.
In addition, persistent weakness in the ATS segment over the past few quarters is a concern. Elevated inventory levels in the industrial end markets are primarily hindering net sales growth in this segment. The company remains skeptical of the dynamic macro environment owing to trade policy uncertainty and the fluid business environment amid a challenging macroeconomic environment.
Image Source: Zacks Investment Research
Portfolio Strength Aids CLS
Despite the recent blip, Celestia has been benefiting from the ongoing generative AI boom, driven by solid demand trends for AI/ML compute and networking products from hyperscale customers. AI investments are driving demand for its 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 a positive. Its strong research and development foundations allow it to produce high-volume electronic products and highly complex technology infrastructure products for a wide range of industries. The company continuously enhances its manufacturing, engineering, design, quality and supply-chain capabilities while developing trusted relationships with leading customers. This strategy has augmented its market penetration in each of the markets it serves.
Its customer base includes several leading manufacturers from multiple 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 one specific sector.
Estimate Revision Trend
Earnings estimates for Celestia for 2026 have moved up 50.7% to $10.16 over the past year, while the same for 2027 have jumped 81.8% to $14.6 since July 2025. The positive estimate revision depicts bullish sentiments for the stock.
Image Source: Zacks Investment Research
End Note
With a diverse portfolio of products that form an integral part of AI applications, Celestica’s remarkable transformation in recent years offers a competitive edge across the broader technology market. The company is well poised for sustained growth over the years, backed by its robust infrastructure investments, solid technology know-how and wide industry experience. As the company scales up production volumes and costs go down, possible uses for silicon photonics are likely to soar across several industries, including automotive, data center and high-performance computing, telecommunications, medical, aerospace and defense. Moreover, with improving earnings estimates, the stock is witnessing a positive investor perception.
However, with a Zacks Rank #3 (Hold), Celestica appears to be taking a middle-of-the-road approach, and new investors could be better off trading with caution. High operating expenses and stiff competitive pressure remain potent headwinds for the company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.