It has been about a month since the last earnings report for Celestica (CLS). Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Celestica due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Celestica, Inc. before we dive into how investors and analysts have reacted as of late.
Celestica Surpasses Q4 Earnings Estimates on Higher Revenues
Celestica recorded strong fourth-quarter 2025 results with adjusted earnings and revenues beating the respective Zacks Consensus Estimate.
This Toronto-based electronics manufacturing service provider reported healthy year-over-year revenues backed by robust expansion in the Connectivity & Cloud Solutions (CCS) segment. Management’s emphasis on innovation, product diversification and AI advancements was a key growth driver. Solid growth in free cash flow was a tailwind.
Net Income
Quarterly net earnings were $267.5 million or $2.31 per share, up from $151.7 million or $1.29 per share in the year-ago quarter. The growth in GAAP earnings was primarily attributable to top-line improvement.
Non-GAAP net earnings increased to $218.8 million or $1.89 per share from $130.2 million or $1.11 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 15 cents.
Revenues
Quarterly revenues were $3.65 billion, up 44% year over year, led by healthy demand in the CCS segment. The top line exceeded management’s guidance of $3.325 billion to $3.575 billion and beat the Zacks Consensus Estimate by $189 million.
Quarterly Segment Results
Total revenues in the Connectivity & Cloud Solutions (CCS) segment improved 64% year over year to $2.86 billion, primarily driven by strong demand in the Communications end market. The segment accounted for 78.3% of the company’s total revenues in the fourth quarter.
The Communications end market benefited from solid growth in the hardware platform solutions (HPS) portfolio backed by hyperscale customer demand for networking products, including 400G switches and 800G switches. HPS revenues increased 72% year over year to $1.4 billion. The segment’s margin was 8.4% compared with 7.9% in fourth-quarter 2024.
Total revenues in the Advanced Technology Solutions segment declined 1% year over year to $0.8 billion. The segment’s margin was 5.3% year over year compared with 4.6% a year ago.
Cash Flow & Liquidity
In the reported quarter, Celestica generated an operating cash flow of $250.6 million compared with $143.4 million in the year-ago quarter, bringing the respective tallies for 2025 and 2024 to $659.5 million and $473.9 million. Free cash flow was $155.9 million in the fourth quarter compared with $95.8 million in the prior-year quarter.
As of Dec. 31, 2025, the company had $595.6 million in cash and cash equivalents with a long-term debt of $750.5 million compared with respective tallies of $423.3 million and $770.2 million a year ago.
Guidance Up
For the first quarter of 2026, Celestica expects revenues in the range of $3.85 billion to $4.15 billion. Non-GAAP earnings per share are expected to be in the band of $1.95-$2.15. Management expects the non-GAAP operating margin to be about 7.8%.
With strong quarterly results, Celestica currently anticipates 2026 revenues to be approximately $17 billion, up from the previous projection of $16 billion. Non-GAAP operating margin is expected to be 7.8%. Non-GAAP adjusted earnings are expected to be $8.75 per share, up from the previous view of $8.2 per share. Non-GAAP free cash flow is estimated to be $500 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 15.1% due to these changes.
VGM Scores
Currently, Celestica has a nice Growth Score of B, a score with the same score on the momentum front. However, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Celestica has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Celestica belongs to the Zacks Electronics - Manufacturing Services industry. Another stock from the same industry, Sanmina (SANM), has gained 4.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.
Sanmina reported revenues of $3.19 billion in the last reported quarter, representing a year-over-year change of +59%. EPS of $2.38 for the same period compares with $1.44 a year ago.
Sanmina is expected to post earnings of $2.42 per share for the current quarter, representing a year-over-year change of +71.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +3.9%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Sanmina. Also, the stock has a VGM Score of B.
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Celestica, Inc. (CLS): Free Stock Analysis Report Sanmina Corporation (SANM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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