Celestica: Still A Value Buy Despite The Recent Recovery

Summary

• CLS' overly expensive valuations have finally been brought closer to earth, thanks to the recent market rotation in July/ August 2024.
• With the two main players in AI still reporting robust performance metrics, we believe that CLS remains a compelling value buy, attributed to its cheap PEG non-GAAP ratio of 0.51x.
• Combined with the hyperscalers' intensified capex guidance in the near/ intermediate term, it is unsurprising that CLS is expected to generate robust top/ bottom line growth through FY2026.
• Even so, while the company has been able to generate robust performance metrics along with an excellent upward stock price trend, readers may want to temper their expectations.
• FY2025 is likely to bring forth a tougher YoY comparison, worsened by the risks arising from a highly cyclical data center capex cycle and elevated customer concentration.