CLS Rides on Steady Revenue Growth: Will the Uptrend Persist?

Celestica, Inc. CLS reported quarterly revenues of $3.19 billion, up 27.8% year over year. The figure exceeded management’s guidance of $2.875 billion to $3.125 billion and beat the Zacks Consensus Estimate by $170 million. The growth was driven by multiple factors.

The company boasts a robust portfolio of enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and servers. Such a comprehensive product suite, combined with a strong focus on innovation, is allowing Celestica to tap into the expanding AI infrastructure market. The company is actively collaborating with other industry leaders such as AMD and Broadcom to further augment its portfolio offerings.

During the third quarter, net sales from the company’s Connectivity and Cable Solution portfolio surged 43.2% year over year to $2.41 billion. The growth was primarily driven by healthy demand for 800G and 400G switching products in the data center networking vertical.

Per a report from Grand View Research, the global data center networking market is valued at $38.49 billion in 2024. The market is projected to witness a 17.2% compound annual growth rate from 2025 to 2033. This presents a solid growth opportunity for Celestica. Management is bullish about its revenue growth outlook. The company expects to generate revenue between $3.325-$3.575 billion, indicating 36% year over year growth backed by continuous momentum in the data center market.

How Are Competitors Faring?

Celestica faces competition from Jabil, Inc. JBL and Flex Ltd. FLEX in the Electronics Manufacturing Services industry. In the fiscal fourth quarter, Jabil reported revenues of $8.3 billion, up from $6.96 billion a year ago, beating the Zacks Consensus Estimate by $227 million. The uptick was driven by healthy demand in the Capital Equipment and AI-related Cloud and Data Center Infrastructure verticals. Jabil is steadily expanding its portfolio offering to gain a competitive edge in the AI data center vertical.

In the September quarter, Flex generated $6.8 billion in revenues, up 4% year over year, beating the Zacks Consensus Estimate by $142 million. The uptick was driven by strong data center growth in both the cloud and power end markets. Flex’s diversified portfolio, spanning multiple industries — from cloud infrastructure and AI data centers to automotive and healthcare — continues to be a key strength.

Celestica's Price Performance, Valuation & Estimates

Celestica’s shares have soared 215.6% over the past year compared with the industry’s growth of 93.7%.

From a valuation standpoint, Celestica trades at a forward price-to-earnings ratio of 37.68, up from the industry average of 24.13.

Earnings estimates for 2025 have increased 6.3% to $5.90 over the past 60 days, while the same for 2026 have also increased 20.9% to $8.20.

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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