Valued at a market cap of $14.8 billion, Celestica (TSX:CLS) is a TSX tech stock that has delivered outsized gains to shareholders. In the last 10 years, CLS stock has returned more than 1,000% to investors. This means a $1,000 investment in Celestica in June 2015 would be worth over $11,400 today.
Despite these market-thumping gains, Celestica stock is down almost 30% from all-time highs, allowing you to buy the dip. So, let’s see if CLS stock is a good buy right now.
Catering to growing markets
Celestica is a global supply chain solutions provider operating across North America, Europe, and Asia through two main segments: Advanced Technology Solutions and Connectivity and Cloud Solutions.
It offers comprehensive manufacturing and supply chain services, including design and development, engineering, component sourcing, electronics manufacturing, testing, systems integration, and after-market support.
Celestica develops hardware platform solutions and provides both hardware and software design services, including customizable open-source software solutions. It manages complete programs from initial design through manufacturing and post-market support, offering services like IT asset disposition and asset management.
Celestica serves original equipment manufacturers, cloud service providers, hyperscalers, and companies across diverse industries, including aerospace and defence, industrial, HealthTech, capital equipment, communications, and enterprise markets, positioning itself as an end-to-end technology solutions partner.
A strong performance in Q1
Celestica delivered exceptional Q1 results, demonstrating resilience amid trade policy uncertainty while posting record-high operating margins of 7.1%.
The company achieved revenue of US$2.7 billion and adjusted earnings per share of US$1.20 in Q1, both exceeding the guidance ranges, driven by robust demand from hyperscalers across its Connectivity and Cloud Solutions (CCS) segment.
The standout performance came from High-Performance Solutions (HPS), which generated US$1 billion in revenue, representing a 99% increase and accounting for 39% of total revenue. Strong demand for 400G networking switches and the ramping of 800G programs fueled this exceptional growth, with communications end-market revenues surging 87% year-over-year.
Expanding market share
Management raised full-year guidance, projecting revenue of US$10.9 billion (up from US$10.7 billion) and adjusted EPS of US$5.00 per share (up from US$4.75), reflecting confidence in sustained demand from hyperscalers despite macroeconomic headwinds. It expects CCS segment growth in the high-teens percentage range for 2025.
Celestica’s globally diversified manufacturing footprint provides strategic advantages amid evolving trade policies. The company maintains US$800 million revenue capacity in Richardson, Texas, and Monterrey, Mexico, with the potential to triple output without additional facilities. Recent U.S. administration exemptions for key data centre hardware have provided near-term clarity, though Celestica remains prepared to adapt quickly to policy changes.
Notable developments include securing multiple 1.6T optics program awards, including the first with a major OEM customer, as well as winning an 800G optical transceiver program in Thailand. These wins demonstrate Celestica’s expanding market share and technological leadership in next-generation networking solutions.
Is the TSX tech stock undervalued?
Analysts tracking CLS stock expect adjusted earnings to increase from US$3.88 per share in 2024 to US$7.37 per share in 2027. If the TSX stock is priced at 25 times forward earnings, it will trade around US$185 in early 2027, indicating an upside potential of 45% from current levels.
With strong customer relationships, robust demand visibility, and operational flexibility, Celestica appears well-positioned to navigate current uncertainties while capitalizing on secular data centre growth trends driving long-term value creation.
