Celestica, Inc. CLS is scheduled to report second-quarter 2026 earnings on July 27. The Zacks Consensus Estimate for sales and earnings is pegged at $4.35 billion and $2.29 per share, respectively. Earnings estimates for CLS have increased 0.49% for 2026 and 1.58% for 2027 over the past 60 days.
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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 8.01%, on average.
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Earnings Whispers
Our proven model predicts a likely earnings beat for Celestica for the second 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.
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Celestica currently has an ESP of +1.86% 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 second quarter, Celestica is likely to have benefited from growing investments by hyperscalers in AI infrastructure expansion. Growing demand for AI computing resources is expected to have supported higher shipments of the company's enterprise networking, server and storage platforms. These factors are expected to have propelled growth in the company’s Connectivity & Cloud Solutions ("CCS") business.
Networking demand is also expected to have remained healthy. Increasing adoption of 800G Ethernet switches among hyperscale customers and continued strength in existing 400G programs are likely to have boosted revenue in the Communication vertical.
Outside the CCS segment, Advanced Technology Solutions (ATS) is expected to have benefited from higher demand from the HealthTech and Industrial businesses. Demand in the capital equipment business is also improving.
Per the Zacks Consensus Estimate, revenues from the CCS segment are pegged at $3.58 billion, indicating growth from $2.07 billion a year ago. Revenues from the ATS segment are pegged at $860.06 million, implying a growth from $819 million a year ago.
Price Performance
Over the past year, CLS has surged 116.5% compared with the industry’s growth of 82.3%. It has also outperformed its peers like Jabil Inc. JBL but underperformed Sanmina Corporation SANM over this period. Sanmina has gained 120.2%, and Jabil is up 44.5% 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 26.58 forward earnings, higher than 22.97 for the industry and lower than the stock’s mean of 37.11.
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Investment Considerations
Rapid AI adoption is driving unprecedented investments in AI infrastructure worldwide. Cloud service providers and hyperscale customers are swiftly extending their data center capacity to support these growing AI workloads. These market trends are propelling demand for high-performance networking, AI servers, storage systems and advanced cooling solutions.
Celestica has established a strong presence across the AI data center ecosystem with offerings spanning AI/ML compute platforms, 800G and emerging 1.6T networking switches, storage platforms, optical interconnects and liquid-cooled infrastructure. The company is set to gain from the growing AI ecosystem across industries.
Celestica is also benefiting from a diversified portfolio. While the CCS segment, which includes AI data center solutions, remains its primary growth engine, the ATS segment, offering aerospace, defense, capital equipment and healthcare solutions, diversifies its revenue stream. This increases resilience in the company’s business model and makes it less vulnerable to the AI infrastructure spending cycle. Strong focus on innovation and diverse product offering allow it to sustain its market share against other major rivals in the industry such as Jabil and Sanmina.
To meet accelerating AI infrastructure demand, Celestica continues investing aggressively in manufacturing capacity across Texas, Thailand, Mexico and Taiwan. Investment in production capacity expansion will allow it to efficiently match growing customer demand across sectors. Celestica’s also witnessing strong cash flow growth. Disciplined working capital management remains a major cash flow driver.
End Note
Growing demand tied to data center infrastructure programs and solid traction in the healthcare business are expected to be major growth drivers. Focus on improving operating leverage, efficient working capital management and cash flow growth will likely ensure sustainable growth. Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic products and highly complex technology infrastructure products for a wide range of industries. Upward estimate revision shows investors’ growing confidence in the stock’s growth potential. Hence, with a Zacks Rank #2, CLS appears to be a good investment option at present.
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This article originally published on Zacks Investment Research (zacks.com).