Celestica Rides on Robust Supply Chain Network: Will it Fuel Growth?

Celestica, Inc. CLS is placing strong emphasis on strengthening its global supply chain network. Amid growing geopolitical unrest worldwide, companies across sectors are increasingly affected by supply chain disruptions and procurement delays, leading to loss of business opportunities. Higher raw material purchasing costs and logistics expenses stemming from supply chain issues are straining operating margin growth. Due to this factor, competitive pricing has taken a backseat for many, as a resilient supply chain has become a major deciding factor while selecting a component supplier.

With a presence across 16 countries worldwide, Celestica’s diversified manufacturing network and resilient supply chain are paying off well to mitigate the effects of geopolitical volatility and tariff-related uncertainties. It is steadily expanding capacity and capabilities at its facilities in Richardson, United States, Thailand and Malaysia to support the growing demand for its industry-leading AI data center products. It is also investing in design centers in India, Malaysia and the United States. Moreover, its vertically integrated manufacturing allows Celestica to efficiently scale up supply in response to changing demand trends.

A robust inventory management is also a core component of CLS’ supply chain resilience. Efficiency in working management, flexibility and scalability in operations are major advantages. Owing to such a strategic approach, the company was able to minimize the impact of conflict in the Middle East and Eastern Europe across its supply chain and continue serving customers worldwide.

How Are Competitors Faring?

Celestica faces stiff competition from Jabil, Inc. JBL and Flex Ltd. FLEX. Jabil has an established global presence and a worldwide connected factory network, which enables it to scale up production per the evolving market dynamics. The company is also taking several approaches to mitigate the effects of geopolitical unrest worldwide. Jabil is focusing on localizing its manufacturing units to cater to regional demands. It is set to invest $500 million over the next several years in the Southeast U.S. region. The strategic investment will strengthen Jabil’s position in the AI hardware supply chain.

Flex’s global manufacturing scale is one of its most significant competitive advantages. The company operates more than 49 million square feet globally, including 7 million square feet in the United States and 9 million in Mexico, giving it one of the largest advanced manufacturing footprints in North America. Flex is focusing on localized manufacturing to boost resilience across its supply chain.

Celestica's Price Performance, Valuation & Estimates

Celestica shares have skyrocketed 461.8% over the past year compared with the industry’s growth of 157.5%.

From a valuation standpoint, Celestica trades at a forward price-to-earnings ratio of 38.33, higher than the industry average.

The Zacks Consensus Estimate for Celestica’s earnings for 2025 has increased 9.9% in the past 60 days.

Celestica currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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