Affordable Growth. Analyze the stocks which are showing good growth, decent profitability and health and are not overvalued from a fundamental perspective.


CELESTICA INC

New York Stock Exchange, Inc. / Information Technology / Electronic Equipment, Instruments & Components

Fundamental Rating

6

CLS gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 126 industry peers in the Electronic Equipment, Instruments & Components industry. While CLS has a great profitability rating, there are some minor concerns on its financial health. CLS is not priced too expensively while it is growing strongly. Keep and eye on this one! These ratings could make CLS a good candidate for growth investing.



8

1. Profitability

1.1 Basic Checks

CLS had positive earnings in the past year.
In the past year CLS had a positive cash flow from operations.
Each year in the past 5 years CLS has been profitable.
CLS had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

Looking at the Return On Assets, with a value of 6.36%, CLS is in the better half of the industry, outperforming 77.69% of the companies in the same industry.
CLS has a Return On Equity of 20.73%. This is amongst the best in the industry. CLS outperforms 90.08% of its industry peers.
CLS has a Return On Invested Capital of 13.55%. This is amongst the best in the industry. CLS outperforms 90.08% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CLS is in line with the industry average of 9.20%.
The last Return On Invested Capital (13.55%) for CLS is above the 3 year average (8.21%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 6.36%
ROE 20.73%
ROIC 13.55%
ROA(3y)2.99%
ROA(5y)2.52%
ROE(3y)9.87%
ROE(5y)7.82%
ROIC(3y)8.21%
ROIC(5y)6.5%

1.3 Margins

CLS's Profit Margin of 4.08% is fine compared to the rest of the industry. CLS outperforms 66.94% of its industry peers.
CLS's Profit Margin has improved in the last couple of years.
With a decent Operating Margin value of 5.61%, CLS is doing good in the industry, outperforming 66.94% of the companies in the same industry.
In the last couple of years the Operating Margin of CLS has grown nicely.
Looking at the Gross Margin, with a value of 10.47%, CLS is doing worse than 78.51% of the companies in the same industry.
In the last couple of years the Gross Margin of CLS has grown nicely.
Industry RankSector Rank
OM 5.61%
PM (TTM) 4.08%
GM 10.47%
OM growth 3Y33.83%
OM growth 5Y14.59%
PM growth 3Y42.53%
PM growth 5Y15.53%
GM growth 3Y11.64%
GM growth 5Y8.47%

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5

2. Health

2.1 Basic Checks

CLS has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
The number of shares outstanding for CLS has been reduced compared to 1 year ago.
Compared to 5 years ago, CLS has less shares outstanding
CLS has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 3.59 indicates that CLS is not in any danger for bankruptcy at the moment.
CLS has a Altman-Z score (3.59) which is in line with its industry peers.
CLS has a debt to FCF ratio of 2.47. This is a good value and a sign of high solvency as CLS would need 2.47 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 2.47, CLS is in the better half of the industry, outperforming 71.90% of the companies in the same industry.
CLS has a Debt/Equity ratio of 0.49. This is a healthy value indicating a solid balance between debt and equity.
CLS's Debt to Equity ratio of 0.49 is on the low side compared to the rest of the industry. CLS is outperformed by 73.55% of its industry peers.
Although CLS does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
Industry RankSector Rank
Debt/Equity 0.49
Debt/FCF 2.47
Altman-Z 3.59
ROIC/WACC1.49
WACC9.12%

2.3 Liquidity

CLS has a Current Ratio of 1.47. This is a normal value and indicates that CLS is financially healthy and should not expect problems in meeting its short term obligations.
CLS has a worse Current ratio (1.47) than 77.69% of its industry peers.
CLS has a Quick Ratio of 1.47. This is a bad value and indicates that CLS is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.87, CLS is doing worse than 85.12% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 1.47
Quick Ratio 0.87

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7

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 60.09% over the past year.
The Earnings Per Share has been growing by 17.61% on average over the past years. This is quite good.
Looking at the last year, CLS shows a quite strong growth in Revenue. The Revenue has grown by 17.52% in the last year.
Measured over the past years, CLS shows a small growth in Revenue. The Revenue has been growing by 3.72% on average per year.
EPS 1Y (TTM)60.09%
EPS 3Y34.89%
EPS 5Y17.61%
EPS Q2Q%60%
Revenue 1Y (TTM)17.52%
Revenue growth 3Y11.47%
Revenue growth 5Y3.72%
Sales Q2Q%22.33%

3.2 Future

CLS is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 27.81% yearly.
CLS is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 14.98% yearly.
EPS Next Y60.56%
EPS Next 2Y35.81%
EPS Next 3Y27.49%
EPS Next 5Y27.81%
Revenue Next Year21.69%
Revenue Next 2Y15.16%
Revenue Next 3Y13.25%
Revenue Next 5Y14.98%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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.

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6

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 27.15, CLS can be considered very expensive at the moment.
CLS's Price/Earnings ratio is a bit cheaper when compared to the industry. CLS is cheaper than 66.94% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.41, CLS is valued at the same level.
Based on the Price/Forward Earnings ratio of 21.63, the valuation of CLS can be described as rather expensive.
Based on the Price/Forward Earnings ratio, CLS is valued a bit cheaper than the industry average as 68.59% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 23.69. CLS is around the same levels.
Industry RankSector Rank
PE 27.15
Fwd PE 21.63

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CLS indicates a somewhat cheap valuation: CLS is cheaper than 66.94% of the companies listed in the same industry.
CLS's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. CLS is cheaper than 66.12% of the companies in the same industry.
Industry RankSector Rank
P/FCF 29.55
EV/EBITDA 16.3

4.3 Compensation for Growth

The 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.
PEG (NY)0.45
PEG (5Y)1.54
EPS Next 2Y35.81%
EPS Next 3Y27.49%

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0

5. Dividend

5.1 Amount

CLS does not give a dividend.
Industry RankSector Rank
Dividend Yield N/A

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