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Celestica, Inc. (CLS) Soars to 52-Week High, Time to Cash Out?
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Shares of Celestica (CLS - Free Report) have been strong performers lately, with the stock up 36.1% over the past month. The stock hit a new 52-week high of $86.36 in the previous session. Celestica has gained 193.2% since the start of the year compared to the 31.4% move for the Zacks Computer and Technology sector and the 43.3% return for the Zacks Electronics - Manufacturing Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 23, 2024, Celestica reported EPS of $1.04 versus consensus estimate of $0.94 while it beat the consensus revenue estimate by 3.66%.
For the current fiscal year, Celestica is expected to post earnings of $3.85 per share on $9.6 billion in revenues. This represents a 58.44% change in EPS on a 20.55% change in revenues. For the next fiscal year, the company is expected to earn $4.43 per share on $10.42 billion in revenues. This represents a year-over-year change of 15.32% and 8.52%, respectively.
Valuation Metrics
Celestica may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Celestica has a Value Score of B. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 22.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 19X. On a trailing cash flow basis, the stock currently trades at 22.6X versus its peer group's average of 15.6X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Celestica currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Celestica fits the bill. Thus, it seems as though Celestica shares could still be poised for more gains ahead.
How Does CLS Stack Up to the Competition?
Shares of CLS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Plexus Corp. (PLXS - Free Report) . PLXS has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Plexus Corp. beat our consensus estimate by 20.92%, and for the current fiscal year, PLXS is expected to post earnings of $6.81 per share on revenue of $4.23 billion.
Shares of Plexus Corp. have gained 21.2% over the past month, and currently trade at a forward P/E of 24.37X and a P/CF of 19.82X.
The Electronics - Manufacturing Services industry is in the top 5% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CLS and PLXS, even beyond their own solid fundamental situation.
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Celestica, Inc. (CLS) Soars to 52-Week High, Time to Cash Out?
Shares of Celestica (CLS - Free Report) have been strong performers lately, with the stock up 36.1% over the past month. The stock hit a new 52-week high of $86.36 in the previous session. Celestica has gained 193.2% since the start of the year compared to the 31.4% move for the Zacks Computer and Technology sector and the 43.3% return for the Zacks Electronics - Manufacturing Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 23, 2024, Celestica reported EPS of $1.04 versus consensus estimate of $0.94 while it beat the consensus revenue estimate by 3.66%.
For the current fiscal year, Celestica is expected to post earnings of $3.85 per share on $9.6 billion in revenues. This represents a 58.44% change in EPS on a 20.55% change in revenues. For the next fiscal year, the company is expected to earn $4.43 per share on $10.42 billion in revenues. This represents a year-over-year change of 15.32% and 8.52%, respectively.
Valuation Metrics
Celestica may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Celestica has a Value Score of B. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 22.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 19X. On a trailing cash flow basis, the stock currently trades at 22.6X versus its peer group's average of 15.6X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Celestica currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Celestica fits the bill. Thus, it seems as though Celestica shares could still be poised for more gains ahead.
How Does CLS Stack Up to the Competition?
Shares of CLS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Plexus Corp. (PLXS - Free Report) . PLXS has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Plexus Corp. beat our consensus estimate by 20.92%, and for the current fiscal year, PLXS is expected to post earnings of $6.81 per share on revenue of $4.23 billion.
Shares of Plexus Corp. have gained 21.2% over the past month, and currently trade at a forward P/E of 24.37X and a P/CF of 19.82X.
The Electronics - Manufacturing Services industry is in the top 5% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CLS and PLXS, even beyond their own solid fundamental situation.