) has a solid outlook for 2012 and 2013 and is a Zacks #1 Rank
Celestica Inc. provides electronics manufacturing services and
solutions to original equipment manufacturers (OEMs) in the
consumer, communications, enterprise computing, industrial,
aerospace and defense, healthcare and green technology sectors in
Asia, the Americas and Europe.
Recently Reported Earnings
CLS recently reported earnings for 4Q11 and the 2011 fiscal year.
Revenues increased to $7.2 billion, up from $6.5 billion in 2010.
Earnings increased a little more than 100% from $0.44 per share to
$0.89 per share.
Solid Earnings Surprise
While the recent track record for CLS has not been stellar, the
company did recently beat earnings in a big way. The Zacks
Consensus Estimate called for $0.23 and the company reported $0.32
for a $0.09 beat or 39% ahead of expectations. That size beat
didn't turn into a big move for the stock.
The last time the stock beat, the June 2011 quarter, the stock
moved higher by 6%. That beat was a 10% ahead of expectations,
significantly less than the 39% we just saw. The most recent
quarter saw a 2% move for the stock.
Topline surprises, good and bad
One reason the stock has not moved much with the earnings beats are
the topline disappointments. In the most recent quarter, the
revenue came 1.5% below expectations. A more sizable miss in the
September 2010 quarter saw a 3.5% miss on the topline, which helped
push the stock lower by 4.75%.
CLS trades at a discount to industry averages for just about every
key metrics that investors look at. We note that forward PE is
almost right in line with the industry, but trailing PE shows CLS
trading at a discount. Price to Sales of 0.2X also stands out,
especially when compared to 1.2x the industry rate. Consistent
beats on the topline would likely serve to increase that multiple.
The price and consensus chart below shows that analysts don't have
the easiest job in the world. The trend of 2012 earnings, shown in
red, correlates highly with the stock price action of late. We
think that as the 2013 earnings expectations take over, the stock
will have a good chance of appreciating.
Brian Bolan is the Aggressive Growth Stock Strategist for
Zacks.com. He is also the Editor in charge of the
Run Investor service
CELESTICA INC (
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