Will Growth in the CCS Segment Boost Celestica's Q4 Earnings?

Celestica, Inc. CLS is scheduled to report fourth-quarter 2025 earnings on Jan. 28. In the to-be-reported quarter, the company is likely to have recorded higher revenues from the Connectivity & Cloud Solutions segment owing to healthy demand in the communications end market.

Factors at Play?

During the quarter, Celestica introduced a leading-edge storage platform, the SD6300 ultra-dense storage expansion system, to cater to the exponential AI data growth across traditional enterprise and hyperscale data centers. With a compact footprint of only 1125 mm (including cable management assembly), the SD6300 maximizes utilization of existing data center floor space as it can be accommodated within standard 1200 mm racks.

In the to be reported quarter, Celestica introduced two new 1.6TbE data center switches, the DS6000 and DS6001, to support high-bandwidth, AI/ML data center applications. While the DS6000 is a 3RU, 64-port x 1.6TbE data center switch for traditional air-cooled data center installations, the DS6001 is a 2OU, 64-port x 1.6TbE switch offering a hybrid cooled solution based on the 21-inch OCP ORv3 rack. Together, the switches double the switching capacity of Celestica’s current offerings. Such innovative product launches are expected to have a favorable impact on fourth-quarter results.

Celestica has gained solid market traction in the fast-growing AI data center market. Strong demand for its 800G switches among hyperscalers is expected to drive growth in the communications end market. Despite some weakness in the Enterprise end market, healthy traction in the AI/ML compute business will likely drive growth.

Overall Expectations

The Zacks Consensus Estimate for CCS revenues is pegged at $2.66 billion, indicating a growth from $1.73 billion a year ago. Net income is projected at $218.5 million.

The Zacks Consensus Estimate for total revenue is pegged at $3.45 billion, indicating 35.46% year over year growth. The consensus mark for earnings is currently pegged at $1.73 per share, indicating growth from $1.11 in the year-earlier quarter.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Celestica for the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Celestica currently has an ESP of 0.00% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Corning Incorporated GLW is set to release quarterly numbers on Jan 28. It has an Earnings ESP of +1.72% and sports a Zacks Rank #2. 

The Earnings ESP for Amphenol Corporation APH is +3.78% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jan 28.

The Earnings ESP for SAP SAP is +0.57% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jan 29.

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

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