Celestica (TSX:CLS) has been making some notable moves in the stock market recently. As of August 2024, Celestica’s stock has shown a solid performance, with shares up a whopping 153% in the last year.
This uptick is a testament to the company’s strategic focus on enhancing its manufacturing capabilities and expanding its services in the tech sector. Its revenue growth has been steady, driven by strong demand in key markets such as aerospace and defence, which has helped boost investor confidence. So, let’s look at why this stock is still a strong buy today.
Impressive earnings
On the financial front, Celestica’s recent earnings report highlighted an impressive 10% rise in revenue year over year, reaching $2.8 billion. The company’s net income also saw a significant jump, with a 12% increase compared to the previous year. Analysts are optimistic about Celestica’s future, with projections indicating continued growth driven by innovations and strategic partnerships. Overall, Celestica seems to be on a positive trajectory, making it an interesting stock to watch for those interested in the tech and manufacturing sectors.
More recently, Celestica continues to deliver robust results. For the second quarter (Q2) of 2024, the company reported a 23% increase in revenue year over year, reaching $2.39 billion. This surge was driven by strong performance in its Connectivity & Cloud Solutions (CCS) segment, which saw a 51% revenue increase. The non-International Financial Reporting Standards (IFRS) adjusted earnings per share (EPS) for Q2 2024 was $0.91, up significantly from $0.55 the previous year. This demonstrates Celestica’s ability to not only grow but also enhance profitability in a competitive market.
Offering value
In the past, this company demonstrated impressive growth, fuelled by its strong position in design, manufacturing, and supply-chain solutions. Back in 2023, Celestica saw its revenue soar to $8.78 billion, a notable jump from previous years. The company’s profit margins have also been commendable, consistently staying in the positive, which is a testament to its efficient operations. The stock’s past performance reflected its solid business fundamentals, which then attracted both institutional and individual investors.
Currently, Celestica’s stock offers several benefits for investors. With a market cap of $8.89 billion and a forward price-to-earnings (P/E) ratio of 14.95, it’s positioned well compared to many peers. The company’s price-to-sales (P/S) ratio of 0.74 and enterprise value-to-revenue ratio of 0.80 indicate that Celestica is valued attractively relative to its revenue generation. Despite its high beta of 2.26, suggesting greater volatility, the stock’s performance has been stellar.
Looking ahead
Looking forward, Celestica’s future benefits are looking bright. The company has raised its full-year 2024 outlook, anticipating revenue of $9.45 billion and non-IFRS adjusted EPS of $3.62. This reflects anticipated growth of 19% and 49%, respectively, from 2023. Its optimistic forecast is underpinned by strong demand dynamics and the company’s strategic focus on execution.
What’s more, the company’s financial health is robust. It holds a healthy balance sheet that includes $434 million in cash and a manageable debt level of $951.8 million. The current ratio stands at 1.47, indicating good short-term liquidity. While Celestica does not currently pay dividends, its reinvestment strategy into growth opportunities could potentially yield significant returns for shareholders in the future.
Bottom line
Celestica’s stock has been a strong performer in the past. It continues to show solid benefits in the present and is poised for future gains. With a proven track record, strong financial metrics, and an optimistic growth outlook, Celestica presents a compelling case for investors looking for growth and stability in the technology and manufacturing sectors.
