Celestica (CLS): Future Prospects and Stock Outlook

This site is a great place for me (@mifsee(2) has been working on company and stock analysis while learning privately.

This is only a record of my personal analysis and the contents may contain errors or information that differs from the actual situation. Please understand in advance when viewing this site.

Introduction.

Celestica (CLS) is a company with extensive experience and technological advantages in the field of electronics manufacturing services (EMS).

In particular, the company is playing an important role in fields as diverse as cloud infrastructure, AI, medical devices, and aerospace, and is attracting attention for its growth potential.

We will delve deeper into Celestica's business, its unique strengths, and its future prospects.

What is Celestica (CLS) and what is its business?

Celestica Inc. (ticker: CLS),A global EMS (Electronics Manufacturing Services) company headquartered in Toronto, Canada.

Providing integrated services from design to manufacturing and supply chain managementThe company is responsible for supporting the overall product lifecycle of its clients.
For Celestica's clients,It includes companies in a wide range of sectors such as aerospace and defense, telecommunications, healthcare, industrial equipment, and semiconductors.

The company's business is based on two pillars: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS).

ATS provides specialized manufacturing and design services for healthcare and aerospace, while CCS specializes in networking and storage solutions for cloud infrastructure and data centers.

In recent years, the company has particularly focused on high-performance networking equipment (e.g., 800G switches) to support AI and machine learning processing,It is increasing its competitiveness in the technology sector.

Celestica has more than 20 manufacturing facilities worldwide and also promotes improvement activities and standardization to maintain quality and efficiency within the industry.
The company is also actively engaged in ESG activities, such as greenhouse gas emission reduction, based on its sustainability goals.

Celestica's corporate information is below.

• Company Name:Celestica Inc.
• Date of Establishment: 1994
• Head Office LocationToronto, Canada
• Name of Representative:Robert Mionis : Robert Mionis
• Official Site: https://www.celestica.com/
• Main Businesses: Provider of electronic manufacturing services (EMS), design and supply chain management services. Products and services for a wide variety of industries including aerospace, defense, telecommunications, healthcare, industrial equipment, and semiconductors.

What are Celestica's (CLS) main products and services?

Celestica's (CLS) core products and services consist of a wide range of manufacturing and supply chain solutions.
There are two main business areas

Advanced Technology Solutions (ATS)

Designs and manufactures complex electronic devices for healthcare, aerospace, defense, and industrial customers.
In the healthcare field, this includes assembly and inspection of medical equipment, and in the industrial equipment field, support for the manufacture of semiconductor-related products.
Also,The company also has strengths in robotics and the manufacture of display devices.

Connectivity & Cloud Solutions (CCS)

Provides networking, storage and server solutions for the telecommunications and cloud markets.
The company offers efficient networking equipment, especially for data centers and cloud infrastructures, as well as high-performance products such as 800G switches.
These products are,It supports advanced workloads such as AI and machine learning, contributing to the growth of the cloud market.

Celestica provides comprehensive services ranging from manufacturing to logistics and supply chain management to support customers throughout the entire product lifecycle. The company also implements standardization and improvement activities to enhance quality and efficiency at each site, which supports the company's competitiveness.

What is the business model of Celestica (CLS)?

Celestica Inc.'s (CLS) business model is primarily based on the integrated provision of electronics manufacturing services (EMS) and supply chain management.

This model is,Extensive support system encompassing design, manufacturing, shipping, and after-sales service, enabling customized services to meet the needs of client companies.The company is doing so.

Key business model elements include

End-to-end supply chain integration

The company manages the entire supply chain from product planning to component procurement, manufacturing, inspection, and distribution, efficiently integrating each process to reduce costs and shorten lead times. The company provides services that improve the operational efficiency of its clients, such as supply chain optimization and inventory management.

Expertise for specific industries

Celestica has expertise in addressing industry-specific regulations and requirements in the aerospace, telecommunications, healthcare, and semiconductor industries.
For example, the company provides products for the aerospace and defense industries, which require high quality standards, and in the healthcare sector, it specializes in the manufacturing and quality control of medical devices.

Provide high-end technology solutions

Provide advanced technology products for cloud and data centers, including hardware for AI and machine learning processing (e.g., 800G switches) and high-density networking equipment.
The company is strengthening its customer base to meet the rapidly expanding data center market and demand for cloud infrastructure.

Global production network and standardization

With more than 20 manufacturing sites around the world, the company maintains uniform quality at each site by introducing standardized methods. In addition, improvement activities and training are implemented to provide efficient and high-quality output. The company ensures a flexible production system that meets the needs of each customer.

ESG (Environmental, Social and Governance) Compliance

Sustainability Perspectives,The company also manages its operations based on ESG criteria, including processes to reduce environmental impact and greenhouse gas emissions.These efforts have contributed to the long-term enhancement of corporate value.

The business model based on these elements is a full-support manufacturing service that leverages industry-specific expertise and provides an environment in which clients can focus on their core business.

What is Celestica's role in the AI market and where does it stand in the market?

As AI infrastructure adoption and growth accelerates, Celestica (CLS) is playing an important role in the market, especially through the provision of networking, storage, and computing equipment for data centers.

To support the massive data processing required for AI and machine learning, Celestica is supporting infrastructure expansion in the cloud and enterprise sectors with infrastructure products such as next-generation 800G switches and high-density servers.

Celestica is,By focusing on the development and manufacturing of infrastructure equipment, especially for AI and cloud infrastructures, the company is contributing to the infrastructure development of enterprise customers by meeting their data processing needs.
Celestica's networking solutions also provide the high throughput and low latency environments required for AI and ML applications, helping companies deploy efficient AI infrastructure.

With the growth of AI infrastructure, Celestica continues to strengthen these product lines,In particular, a full line of products targeting cloud providers and large-scale data centers is a factor in strengthening their competitive advantage.

This position differentiates Celestica from other EMS companies as a core hardware supplier in the AI infrastructure market.

Who is the customer base of Celestica (CLS)?

Celestica's (CLS) customer base spans a wide range of industries, with its primary customers being companies that require particularly advanced manufacturing technologies and supply chain integration.
The main customer segments are as follows

Telecommunications and cloud infrastructure companies

With key customers being the fastest growing companies in the telecommunications networking and cloud markets, Celestica offers products for high-density networking equipment and data centers. The company is enhancing cloud infrastructures and meeting the high-performance technology needs of AI and machine learning workloads.

Aerospace and Defense Industry

Companies involved in the manufacture of aircraft and defense equipment are also important customers, requiring manufacturing processes that meet strict quality and safety standards. Celestica meets the requirements of these industries by manufacturing high-precision components and equipment for the aerospace and defense industries.

Healthcare and medical device manufacturers

Providing services to support the manufacturing and quality control of medical devices, the company offers high-quality products that comply with regulations to customers in the medical field. The company has earned the trust of customers in the medical device field, especially where precision assembly and inspection are required.

Semiconductor and Industrial Equipment

Customers include companies that handle semiconductor manufacturing equipment and industrial equipment. Especially for the semiconductor industry, Celestica provides efficient manufacturing support through its integrated services, which require complex management of the supply chain.

Robotics and Automation

Robotics companies using advanced automation technology are also part of the customer base. Celestica's precision manufacturing technology is being used as robots are increasingly automated in manufacturing and logistics.

By supporting customers in such a wide variety of industries, Celestica has earned a reputation as a partner for companies requiring complex supply chains and advanced manufacturing technologies.

What is the trading market?

Celestica (CLS) is listed on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX). Its ticker symbol is "CLS".

What are the sectors, industries, and themes to which Celestica (CLS) belongs?

sector

Technology Celestica (CLS) belongs to the technology sector and provides specialized services for electronics manufacturing and supply chain management. The company is growing especially in hardware products for telecommunications, cloud infrastructure, and AI, and plays a role in supporting the digitalization of companies and the advancement of their infrastructure.

type of industry

Electronic Manufacturing Services (EMS):.Celestica is classified as an electronics manufacturing services company, manufacturing high-quality products and supply chain integration for multiple industries, including data centers, medical devices, aerospace, and defense Competitive within the EMS industry and able to meet advanced technical standards for specific industries The company is a leading provider of EMS services in the U.S. and Canada.

Themes belonging to

AI Infrastructure & Cloud Technology:.Celestica offers next-generation high-density networking equipment (e.g., 800G switches) to address the data center, AI, and cloud markets, which helps companies develop their AI and cloud infrastructures. The company is also closely related to ESG-related themes due to its focus on ESG (Environmental, Social, and Governance) and its commitment to sustainable supply chain management and environmental impact reduction.

Dividends?

Celestica (CLS) does not currently pay a dividend.

Who are the competitors of Celestica (CLS)?

Celestica's (CLS) main competitors are.

• Jabil Circuit, Inc. [JBL
  Jabil is a global EMS (Electronics Manufacturing Services) company, offering a comprehensive range of services from electronics design to manufacturing and supply chain. Like Celestica, it serves customers across multiple sectors, including telecommunications, medical, and industrial equipment, and competes particularly in high-volume production of electronic products and assembly of precision products.
• Flex Ltd. [FLEX] (Japan)
  As a global EMS company, Flex also offers services that support everything from product development to supply chain management. Flex has strengths in IoT, cloud infrastructure, and medical devices, and competes directly with Celestica on many occasions, particularly in the manufacture of high-performance networking products and medical devices.
• Sanmina Corporation [SANM] (Japan)
  Sanmina provides manufacturing services primarily to customers in the telecommunications, industrial, medical, and defense sectors. Like Celestica, it focuses on manufacturing precision products and supply chain management, both of which require high quality, and is a notable competitor in the highly competitive EMS market.
• Technicolor (TE Connectivity Ltd.) [TEL
  TE Connectivity is a provider of networking and connectivity products in the telecom and data center markets. The company is particularly strong in the telecommunications infrastructure and industrial equipment sectors, and competes with Celestica in terms of products for AI and IoT devices.
• Plexus Corp. [PLXS].
  Plexus is an EMS company that provides product design and manufacturing and supply chain management services. The company provides services across the entire product life cycle, focusing on customers in the medical, telecommunications, and industrial equipment sectors, many of which compete with Celestica.

Like these companies, Celestica offers a broad range of products and services, but differentiates itself by strengthening its expertise, particularly in high-density networking products for telecommunications and cloud computing, and in medical and industrial applications.

What is the size and growth potential of the industry to which Celestica (CLS) belongs?

Celestica (CLS) belongs toThe electronics manufacturing services (EMS) industry is expected to reach approximately $540 billion globally by 2023 and grow to approximately $1 trillion by 2032.

Annual growth rate (CAGR) expected to be 6.8The Asia-Pacific region in particular accounts for the majority of the market and is the fastest growing.
One factor contributing to this growth is the growing need for EMS in diverse industries, including telecommunications, IT, medical devices, automotive, and industrial IoT.

In the EMS industry, original equipment manufacturers (OEMs) are increasingly outsourcing their manufacturing operations to focus on their core business, and the role of EMS companies in providing end-to-end solutions such as product development, design, assembly, inspection, and logistics is becoming more important.
Growing demand for smart devices, industrial IoT, and AI-related products are also boosting the EMS market.

In the U.S. and Europe,In particular, demand is increasing in the medical device and automotive industries, and the North American market alone is expected to grow to $162 billion by 2023 and $325 billion by 2033.

Going forward, digitalization and automation throughout the electronics manufacturing industry, as well as efforts to address environmentally friendly technologies, are expected to continue to act as drivers of growth.

What are the differentiating factors and advantages of the Celestica (CLS) over the competition?

The differentiating factors and advantages of Celestica (CLS) over its competitors stand out in particular in the following respects

Diverse industry specialization and technical expertise

Celestica provides manufacturing and design solutions in such diverse sectors as telecommunications, cloud computing, medical devices, aerospace, and defense industries, and meets industry-specific product development and quality standards.
This flexible industrial responsiveness is a differentiating factor against competitors who concentrate on specific fields, building a competitive advantage in areas that require complex and advanced technology.

Advanced Networking Solutions for Cloud and AI Infrastructure

Celestica offers high-density, high-throughput networking equipment, including next-generation 800G switches for AI and machine learning-enabled data centers, strengthening its competitive edge in the rapidly growing cloud infrastructure market.
Sophisticated networking solutions for AI infrastructures ensure a competitive advantage in the cloud and enterprise markets.

Quality control through global expansion and standardization

Celestica has more than 20 manufacturing sites around the world and employs standardized processes to ensure uniform quality at all locations.
This standardization activity called the "Celestica Way" is,It brings more consistent product quality and efficiency than its competitors, and has increased its credibility as a global company.

Sustainability and ESG Initiatives

Celestica is actively working on ESG (Environmental, Social, and Governance) goals, such as greenhouse gas reduction, with the aim of reducing its environmental impact. Especially in North America and Europe, because sustainable corporate management is an evaluation indicator,These ESG initiatives are a point of differentiation against the competition.

These factors reinforce Celestica's competitive advantage in meeting demand, especially in the high-growth areas of cloud computing, AI, and medical device manufacturing.

Celestica (CLS) Performance

Celestica's (CLS) financial year ends on December 31.
The schedule for the announcement of quarterly financial results is as follows

• First Quarter Results: Late Apr.
• Second Quarter Financial Results: Late July
• Third Quarter Results: Late Oct.
• Fourth Quarter and Full Year Results: Late January of the following year

First, we will review the following four indicators to perform a minimum performance analysis of Celestica (CLS).

1. Sales:An indicator of a company's performance and growth.
2. Operating cash flow and operating cash flow margin:An indicator that looks at how much cash a company generates from its services. Margins are considered excellent when they are 15% of that ratio.
3. Operating Income:Profit earned by a company from its core business. An indicator to evaluate a company's performance.
4. Free Cash Flow:Free cash that a company keeps on hand. Indicates financial flexibility and business stability.
5. EPS:An indicator that looks at a company's earning power "profitability" and "growth potential" in terms of net income per share. The higher the number, the higher the profitability.

Each data is,Investing.com, ,TradingViewSee from

Celestica (CLS) Stock Price

View the current real-time stock price chart (TradingView) for Celestica (CLS).

The chart shows the Relative Strength Index (RSI). Reference as an indicator of market overheating.

*An overbought indicator when the RSI exceeds 70% to 80%, and conversely, an oversold indicator when the RSI falls below 20% to 30%.

Celestica (CLS) Quarterly: Sales Trends

Quarterly sales forecasts and actual sales and year-on-year changes.

Sales forecasts and actual results are shown in graphs.

Celestica (CLS) Quarterly: Operating Cash Flow and Free Cash Flow Trends

Quarterly operating cash flow, operating cash flow margin and free cash flow.

Each transition is shown in the graph below.

Celestica (CLS) Quarterly: Operating Income and Operating Margin Trends

Quarterly operating income and operating margin trends.

Each transition is shown in the graph below.

Celestica (CLS) Quarterly:EPS Changes

Quarterly EPS forecast and actual EPS.

Each transition is shown in the graph below.

Celestica (CLS) Full Year: Sales Trends

This is the sales forecast for the full year and actual sales and year-on-year changes.

Each transition is shown in the graph below.

Celestica (CLS) Full Year: Operating Cash Flow, Free Cash Flow Trends

Operating cash flow, operating cash flow margin and free cash flow for the full year.

Each transition is shown in the graph below.

Celestica (CLS) Full Year: Operating Income and Operating Margin Trends

The following is a trend of operating income and operating income margin for the full year.

Each transition is shown in the graph below.

Celestica (CLS) Full Year: EPS Changes

This is the EPS forecast and actual EPS for the full year.

Each transition is shown in the graph below.

What are the future lives and prospects of Celestica (CLS)?

The future and outlook for Celestica (CLS) is one of growth driven by several key factors.

Growth of Cloud and AI Infrastructure Markets

Celestica offers high-performance networking products for cloud and data centers (e.g., 800G switches) and is particularly competitive in providing infrastructure for advanced workloads such as AI and machine learning.As the AI infrastructure market expands, demand for the company's high-density networking equipment and storage solutions is increasing, which is expected to contribute to future revenue growth.

Expanding industrial diversity and customer base

Celestica operates in areas as diverse as telecommunications, medical devices, aerospace, and defense, and this diverse industry specialization provides a stable revenue stream.
Especially in the medical device and defense sectors, the company has built trust and secured long-term customer relationships by manufacturing products that require strict quality standards.This diverse client base and industry specialization are factors that support Celestica's growth.

Sustainability and ESG Compliance

The company is committed to reducing greenhouse gas emissions as an environmental concern and emphasizes sustainability throughout its supply chain.Growing interest in environmental, social, and governance (ESG) issues is strengthening investor and customer confidence and increasing long-term corporate value.

Positive growth prospects and stock price forecasts

Celestica's growth has been well received by analysts, who expect revenue growth of more than 11% YoY in FY2024.The company expects stable growth in the future, supported by high demand in the cloud infrastructure, medical, and aerospace sectors.

Celestica's aggressive investment in the cloud and data center markets and the expansion of its product line are expected to continue its growth. In addition, its ability to serve diverse industries and its sustainability strategy reinforce its competitive advantage over the medium to long term.

Celestica (CLS) Q3 2024 Financial Summary

• Total Sales: $2,043M, an increase of $22% over the same period last year. This was mainly due to higher demand for cloud communications and enterprise products.
• Sales by Segment:
  • ATS Segment (Advanced Technology Solutions): $859.4M, accounting for 42% of the total, with strong demand for aerospace and industrial equipment.
  • CCS Segment (Telecommunications and Cloud): $1,183.9 million, an increase of 421 TP3T over the previous year. Growth was particularly strong in the telecommunications and enterprise sectors.

grace (of God, Buddha, etc.)

• Operating income (segment income): The ATS and CCS segments both outperformed the previous year, with profit margins of about 4.81 TP3T and 7.61 TP3T, respectively.
• net income: $80.2M, up $14% from the same period last year, with growth primarily due to the booming telecommunications and cloud markets.

Cash Flow

• Operating Cash FlowThe fund is stable, recording an increase from the previous year with $144.8 million: $144.8 million.

Future Outlook

• Celestica expects continued strong demand in the cloud and telecommunications markets, particularly for its hardware products for data centers. In addition, the industrial sector is expected to continue to experience stable demand.

Celestica recorded significant sales growth on the back of increasing demand in the telecom and cloud markets, with both the ATS and CCS segments showing stable growth and expected to continue to perform well into the future.

Which brokerage firms can I buy shares of Celestica (CLS)?

The following is a list of major brokerages that offer Celestica (CLS) shares. At these brokerages, you can choose to invest as a CFD (Contract for Difference) in addition to direct stock trading as a foreign stock.

I myself mainly use SBI Securities, but some stocks they handle may not be available for purchase. In such cases, I sometimes use CFDs at Saxo Bank Securities or IG Securities.

summary

We have taken an in-depth look at Celestica's business, unique strengths, competitive advantages, and earnings growth. Celestica has shown stable growth in both the Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS) segments, and has established itself as the black child behind the technology infrastructure of its respective industries.

Although it is not a flashy brand, it is expected to grow in the future due to its technological capabilities in a wide range of fields such as medical devices, cloud computing, telecommunications, and aerospace.

The stock price is also on a steady upward trend, and we expect sustained growth.
Since there is a sense of security in terms of fundamentals, personally, I would like to follow a strategy of picking up the pieces when they fall.