Celestica's Numbers Point To An Explosive Stock Future

(10min)

Summary

  • Since my April 'buy' upgrade, Celestica's stock surged 85%. I remain bullish, citing strong fundamentals and expecting new highs despite recent gains near all-time highs.
  • Q1 FY 2025 saw a record 7.1% EBIT margin, with sales up 19.9% and EPS +39.5%. I see the CCS segment, fueled by hyperscaler AI demand (HPS +99% YoY), driving growth.
  • I believe the shift to higher-margin CCS (7.9% margin) and new 1.6T switch wins underpin the raised FY 2025 guidance: $10.85B revenue, $5.00 EPS, signaling continued operating leverage.
  • Valuation remains attractive in my view; I project CLS will maintain 18-21x EV/EBITDA, implying over 43% upside by FY 2026 end as margins and EBITDA expand further.
  • Despite tariff risks and potential for priced-in gains, I believe Celestica's ongoing business transformation and strong AI-driven pipeline support my continued 'buy' rating for significant future returns.
  • This idea was discussed in more depth with members of my private investing community, Beyond the Wall Investing. Learn More »
Entrance of Celestica Inc. in Newmarket, Ontario, Canada.

JHVEPhoto

Intro & Thesis

I initiated my investment coverage of Celestica Inc. (CLS) stock in August 2023, initially with a "Buy" rating, which I then changed to "Hold" and back depending on market conditions and CLS's varying valuation levels. My most recent article on CLS

Hold On! Can't find the equity research you've been looking for?

Now you can get access to the latest and highest-quality analysis of recent Wall Street buying and selling ideas with just one subscription to Beyond the Wall Investing! There is a free trial and a special discount of 10% for you. Join us today!

This article was written by

12.82K Followers
Daniel Sereda is chief investment analyst at a family office whose investments span continents and diverse asset classes. This requires him to navigate through a plethora of information on a daily basis. His expertise is in filtering this wealth of data to extract the most critical ideas. He runs the investing group Beyond the Wall Investing in which he provides access to the same information that institutional market participants prioritize in their analysis. Learn more.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of CLS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About CLS Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on CLS

Related Stocks

SymbolLast Price% Chg
CLS
--
CLS:CA
--