How This Canadian Stock Achieved a Staggering 1147% Growth in 5 Years
Company Overview
Celestica Inc. (CLS) is a leading player in the world of supply chain solutions, offering a wide range of services that cover everything from design and engineering to manufacturing and after-market support. The company operates through two key segments: Advanced Technology Solutions and Connectivity & Cloud Solutions. These divisions allow Celestica to provide tailored solutions to its clients, which include original equipment manufacturers and service providers across industries like aerospace, defense, health technology, and communications.
Based in Toronto, Canada, Celestica’s reach extends far beyond its headquarters. With operations spanning North America, Europe, and Asia, the company is well-positioned to serve a global clientele. Its strategic focus on innovation and efficiency has made it a trusted partner for businesses looking to streamline their supply chains and stay competitive in rapidly evolving markets.
Why Celestica Inc. (CLS) Stock Has Skyrocketed
Over the past year, Celestica’s stock has surged approximately 233.58%, and over the last five years, it has climbed an impressive 1,086.24%.
| Code | Name | GicSector | Beta | 52WeekHigh | 52WeekLow | 50DayMA | 200DayMA | SharesShort | SharesShortPriorMonth | ShortRatio | ShortPercent |
|---|---|---|---|---|---|---|---|---|---|---|---|
| CLS | Celestica Inc. | Information Technology | 2.228 | 130.00 | 35.32 | 95.80 | 74.95 | 2,172,125 | 1,986,556 | 2.61 | 0.0189 |
Several key factors have contributed to this remarkable performance:
1. Strong Financial Performance: In Q3 2024, Celestica reported revenues of $2.5 billion, marking a 22% increase from the same quarter in 2023. The adjusted earnings per share (EPS) stood at $1.04, surpassing market expectations.
2. Strategic Market Expansion: The company has strategically expanded its services into high-growth sectors such as aerospace, defense, and health technology, capitalizing on increasing demand in these industries.
3. Advancements in AI and Data Centers: Celestica’s involvement in AI and hyperscale data center solutions has positioned it favorably within the tech infrastructure market, driving significant revenue growth.
4. Analyst Upgrades: The company’s robust performance has led to positive analyst sentiment, with several upgrades to ‘Strong Buy’ ratings, reflecting confidence in its growth trajectory.
5. Operational Efficiency: Improved operational efficiencies have resulted in better profit margins, contributing to the overall financial health of the company.
6. Robust Demand Across Segments: Both the Advanced Technology Solutions and Connectivity & Cloud Solutions segments have experienced strong demand, contributing to overall revenue growth.
Peers and Competitive Positioning
According to Wealth Awesome, Celestica’s main competitors in the electronic components industry include Flex Ltd. and Jabil Inc.
Valuation Metrics
Key valuation metrics for Celestica Inc. (CLS) are as follows:
| Current | 9/30/2024 | 6/30/2024 | 3/31/2024 | 12/31/2023 | 9/30/2023 |
|---|---|---|---|---|---|
| Market Cap | 10.65B | 6.06B | 6.79B | 5.34B | 3.49B |
| Enterprise Value | 11.19B | 6.58B | 7.32B | 5.75B | 3.93B |
| Trailing P/E | 28.94 | 16.71 | 21.39 | 22.14 | 17.43 |
| Forward P/E | 20.58 | 12.72 | 17.27 | 15.38 | 10.62 |
| PEG Ratio (5yr expected) | — | — | — | — | — |
| Price/Sales | 1.18 | 0.70 | 0.82 | 0.68 | 0.45 |
| Price/Book | 5.85 | 3.36 | 4.00 | 3.03 | 2.01 |
| Enterprise Value/Revenue | 1.21 | 0.75 | 0.88 | 0.72 | 0.50 |
| Enterprise Value/EBITDA | 15.75 | 9.66 | 11.77 | 10.59 | 7.84 |
Key Insights from Valuation Metrics
- Market Cap Growth:
- Celestica’s market cap has more than tripled over the past year, rising from $3.49B in Q3 2023 to $10.65B as of Q3 2024. This reflects strong investor confidence and substantial stock appreciation.
- Enterprise Value:
- The enterprise value (EV) has also surged, from $3.93B in Q3 2023 to $11.19B in Q3 2024, indicating higher overall valuation when factoring in debt and cash reserves.
- P/E Ratios:
- The trailing P/E ratio climbed from 17.43 to 28.94 over the year, reflecting a premium investors are willing to pay for Celestica’s earnings due to growth potential.
- The forward P/E of 20.58 shows expectations of continued growth, albeit at a slightly moderated rate compared to past quarters.
- Revenue Multiples:
- The Price-to-Sales ratio increased from 0.45 in Q3 2023 to 1.18 in Q3 2024, showing greater market value relative to revenue.
- Enterprise Value-to-Revenue also rose from 0.50 to 1.21, reinforcing the premium valuation placed on the company’s revenue growth.
- Profitability and Valuation:
- The Enterprise Value/EBITDA ratio rose from 7.84 in Q3 2023 to 15.75 in Q3 2024. While higher, it remains within acceptable ranges for growth companies, reflecting robust earnings.
- Book Value Premium:
- The Price-to-Book ratio surged from 2.01 in Q3 2023 to 5.85 in Q3 2024, indicating a strong premium placed on Celestica’s equity, driven by its growth trajectory and market positioning.
Key Takeaways
- Celestica’s significant stock appreciation is driven by consistent financial outperformance, strategic expansion into high-growth sectors, and active participation in AI and data center markets.
- Positive analyst sentiment and enhanced operational efficiencies further bolster its market position.
- Sustained demand across its business segments underscores the company’s robust growth trajectory.