Can Rising Defense Demand Boost Celestica's Future Growth Prospects?

Celestica Inc. CLS plays a key role in the global defense industry by designing, engineering and manufacturing high-reliability electronic systems for mission-critical military applications. It acts as a strategic electronics manufacturing and supply chain partner to leading defense original equipment manufacturers (OEMs) worldwide, supporting complex and long-lifecycle programs.

Celestica provides defense solutions such as rugged avionics, secure communication systems, shipboard sensors, signal processing equipment, and radar electronics for air, land and sea platforms. The company also manufactures key components, including circuit boards, integrated assemblies, backplanes, and precision parts used in military applications. Its products also support unmanned aerial vehicles (UAVs) through specialized optoelectronics, sensors, and complex assemblies designed to operate in harsh conditions, such as extreme temperatures, strong vibrations and electromagnetic interference.

It serves defense customers across the entire product lifecycle, from early-stage design and prototyping to full-scale production and after-market services, such as repair and maintenance, enabling defense companies to reduce risk, manage complex supply chains, and sustain long-running military programs. The company also follows strict regulatory and security standards, including International Traffic in Arms Regulations (ITAR) requirements, ensuring high quality, traceability, and secure manufacturing across its global facilities.

As global defense spending rises due to geopolitical tensions, the demand for advanced electronics and secure military systems continues to grow. Celestica is well-placed to benefit from this trend due to its strong expertise in manufacturing and integrating complex and reliable defense electronics systems.

How Are Competitors Advancing in the Defense Sector?

Celestica faces competition from Jabil, Inc. JBL and Sanmina Corporation SANM. Jabil recently supported military and aerospace companies by providing high-quality electronics services for systems, such as drones, radar and secure communications. The company also focuses on precision manufacturing for UAVs, helping customers turn defense designs into finished products.

Sanmina provides reliable electronics and manufacturing services for defense and aerospace systems, including avionics, communications, guidance, and radar equipment. The company maintains its presence in defense supply chains through ongoing partnerships, manufacturing operations and business expansion initiatives.

Celestica's Price Performance, Valuation & Estimates

Celestica shares have soared 112.2% over the past year compared with the industry’s growth of 71.5%.

From a valuation standpoint, Celestica trades at a forward price-to-earnings ratio of 30.09, up from the industry average of 22.97.

Earnings estimates for 2026 have increased 7.55% to $8.83 over the past 60 days, while the same for 2027 has increased 7.05% to $12.61.

Celestica currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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