While growth is established for NYSE:CLS, the stock's valuation remains reasonable.

Last update: Dec 4, 2024

CELESTICA INC (NYSE:CLS) has caught the eye of our stock screener as an affordable growth stock. NYSE:CLS is displaying robust growth metrics and also excels in terms of profitability, solvency, and liquidity. Additionally, it appears to be reasonably priced. Let's delve into the details.

Understanding NYSE:CLS's Growth

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:CLS was assigned a score of 7 for growth:

CLS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 60.09%, which is quite impressive.
Measured over the past years, CLS shows a quite strong growth in Earnings Per Share. The EPS has been growing by 17.61% on average per year.
The Revenue has grown by 17.52% in the past year. This is quite good.
The Earnings Per Share is expected to grow by 27.49% on average over the next years. This is a very strong growth
Based on estimates for the next years, CLS will show a quite strong growth in Revenue. The Revenue will grow by 13.25% on average per year.
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Valuation Analysis for NYSE:CLS

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:CLS, the assigned 6 reflects its valuation:

Compared to the rest of the industry, the Price/Earnings ratio of CLS indicates a somewhat cheap valuation: CLS is cheaper than 70.97% of the companies listed in the same industry.
CLS's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. CLS is cheaper than 73.39% of the companies in the same industry.
CLS's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. CLS is cheaper than 68.55% of the companies in the same industry.
70.16% of the companies in the same industry are more expensive than CLS, based on the Price/Free Cash Flow ratio.
CLS's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of CLS may justify a higher PE ratio.
CLS's earnings are expected to grow with 27.49% in the coming years. This may justify a more expensive valuation.

Understanding NYSE:CLS's Health

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:CLS scores a 7 out of 10:

CLS has an Altman-Z score of 3.53. This indicates that CLS is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.53, CLS is in the better half of the industry, outperforming 60.48% of the companies in the same industry.
The Debt to FCF ratio of CLS is 2.47, which is a good value as it means it would take CLS, 2.47 years of fcf income to pay off all of its debts.
CLS has a Debt to FCF ratio of 2.47. This is in the better half of the industry: CLS outperforms 72.58% of its industry peers.
A Debt/Equity ratio of 0.49 indicates that CLS is not too dependend on debt financing.
Even though the debt/equity ratio score it not favorable for CLS, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
The current and quick ratio evaluation for CLS is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

A Closer Look at Profitability for NYSE:CLS

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:CLS, the assigned 8 is a significant indicator of profitability:

CLS's Return On Assets of 6.36% is amongst the best of the industry. CLS outperforms 80.65% of its industry peers.
With an excellent Return On Equity value of 20.73%, CLS belongs to the best of the industry, outperforming 93.55% of the companies in the same industry.
With an excellent Return On Invested Capital value of 13.55%, CLS belongs to the best of the industry, outperforming 91.94% of the companies in the same industry.
The 3 year average ROIC (8.21%) for CLS is below the current ROIC(13.55%), indicating increased profibility in the last year.
Looking at the Profit Margin, with a value of 4.08%, CLS is in the better half of the industry, outperforming 70.16% of the companies in the same industry.
CLS's Profit Margin has improved in the last couple of years.
CLS has a Operating Margin of 5.61%. This is in the better half of the industry: CLS outperforms 69.35% of its industry peers.
CLS's Operating Margin has improved in the last couple of years.
In the last couple of years the Gross Margin of CLS has grown nicely.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

Check the latest full fundamental report of CLS for a complete fundamental analysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.