Celestica, Inc. CLS is scheduled to report first-quarter 2026 earnings on April 27. The Zacks Consensus Estimate for sales and earnings is pegged at $4.02 billion and $2.08 per share, respectively. Earnings estimates for CLS have increased 1.25% for 2026 and 1.35% for 2027 over the past 60 days.
CLS Estimate Trend
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Earnings Surprise History
This leading electronics manufacturing services firm has had a solid earnings surprise history in the trailing four quarters, exceeding earnings expectations on most occasions. It delivered a four-quarter earnings surprise of 9.08%, on average.
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Earnings Whispers
Our proven model predicts an earnings beat for Celestica for the first 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 exactly 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 +1.32% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping the Upcoming Results
During the quarter, Celestica collaborated with Advanced Micro Devices, Inc. AMD to develop the leading-edge rack scale AI platform “Helios,” by combining AMD’s next-gen GPUs with Celestica’s high-speed networking switches. The platform targets cloud, enterprise, and research customers needing faster, scalable AI infrastructure. Leveraging Celestica’s engineering, manufacturing, and supply chain expertise, AMD is aiming to close the gap with NVIDIA, which provides a full stack ecosystem that includes GPU, interconnect and software. Such an innovative product launch is expected to have a favorable impact on the first-quarter results.
The growing proliferation of AI-based applications and generative AI tools across industries presents a solid growth opportunity for Celestica. AI investments are driving demand for Celestica’s enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions, and servers and storage-related products. These factors are expected to have acted as a tailwind during the first quarter.
However, demand softness in the Advanced Technology Solutions (ATS) segment remains a drag on the top line. Elevated inventory levels in the Industrial end markets are primarily hindering net sales growth in this segment.
Price Performance
Over the past year, CLS has surged 357% compared with the industry’s growth of 193.3%. It has also outperformed its peers like Sanmina Corporation SANM and Jabil Inc. JBL over this period. Sanmina has gained 124.9%, and Jabil is up 141% over this period.
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Key Valuation Metric
From a valuation standpoint, Celestica appears to be trading at a premium relative to the industry and is trading above its mean. Going by the price/earnings ratio, the company’s shares currently trade at 39.83 forward earnings, higher than 28.27 for the industry and the stock’s mean of 35.04.
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Investment Considerations
Enterprises across several industries, from financial services, healthcare, automotive and consumer electronics, are increasingly digitalizing their operations. The companies are generating a large pool of information from their day-to-day operations.
Competitive edge in today’s digital world depends on real-time analytics of that vast information, which helps organizations to make informed decisions. Hence, businesses worldwide are rushing to develop high-performance computing infrastructure and utilize AI data centers. Hyperscalers such as Microsoft, Amazon and Google are expanding their data center footprint to match these requirements. This has created a solid growth opportunity for Celestica’s comprehensive AI data center portfolio.
Celestica’s diverse portfolio offerings are a positive factor. The company has established itself as a key player in the global defense industry. Its boasts a comprehensive portfolio comprising rugged avionics, secure communications, radar systems, and components for UAVs, all built to withstand harsh operating environments. The company supports the full product lifecycle—from prototyping to maintenance, and also ensures compliance with stringent regulations.
Growing geopolitical tension in the Middle East and Europe is propelling global defense spending. This presents a solid growth opportunity for Celestica. However, it faces stiff competition from other major EMS players in the industry, such as Jabil and Sanmina. Both companies are expanding their capabilities in defense electronics and UAV systems. However, it is to be noted that Celestica is exposed to customer concentration risk.
End Note
Celestica is likely to have benefited from solid demand in the Connectivity & Cloud Solutions segment. Solid growth in the hardware platform solutions (HPS) portfolio, backed by hyperscale customer demand for networking products, including 400G switches and 800G switches, is likely to have driven revenue growth. Growing collaboration with industry leaders such as AMD is a positive. Strong demand in the aerospace and defense domain is also a major growth driver. Management’s focus on increasing free cash flow through efficient working capital management is a positive factor. With healthy demand in several verticals, CLS appears to be a good investment option at present.
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Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
Jabil, Inc. (JBL) : Free Stock Analysis Report
Celestica, Inc. (CLS) : Free Stock Analysis Report
Sanmina Corporation (SANM) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
