Should You Join the CLS Bandwagon on Rising Earnings Estimates?

Earnings estimates for Celestica Inc. CLS for 2025 have moved up 33.2% to $5.90 over the past year, while the same for 2026 has increased 41.8% to $8.21. The positive estimate revision depicts optimism about the stock’s growth potential and speaks volumes about the solid business model.

CLS Rides on Healthy AI Traction

The growing proliferation of AI-based applications and generative AI tools across industries presents a solid growth opportunity for Celestica. AI investments are driving demand for Celestica’s enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and servers, and storage-related products. 

To further capitalize on this trend, Celestica is steadily expanding its offering through innovation and strategic collaboration. Powered by EPYC Embedded 9004 series processors from Advanced Micro Devices, Celestica SC6100 is a next-generation, 2U rackmount all-flash storage controller designed to deliver superior performance for the most demanding enterprise application workloads. The company introduced DS4100, a 1U 800G per port top-of-rack, leaf/spine switch to cater to the high-bandwidth demands of data center networking. The solution is designed with Broadcom’s TH4-12.8T switch chipset. The company expects solid demand for its 400G switch products and 800G switch products, driven by the growing usage of high bandwidth-intensive AI applications.

CLS Gains From Product Diversification, R&D Thrust

Celestica’s focus on product diversification and increasing its presence in high-value markets is 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 pursues enhancing 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.

Price Performance

Celestica has gained a phenomenal 270.3% over the past year compared with the industry’s growth of 112.5%. It has also outperformed peers like Flex Ltd. FLEX and Jabil Inc. JBL over this period. While Flex is up 61.9%, Jabil has surged 57.4%.

With more than 25 years of experience in manufacturing backed by a simplified and optimized global network, Celestica is committed to delivering next-generation, cloud-optimized data storage and industry-leading networking solutions to help customers balance performance, power efficiency and space as technologies evolve.

One-Year CLS Stock Price Performance

End Note

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. 

The stock delivered a trailing four-quarter average earnings surprise of 6.9%. Celestia currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research