CLS vs. SANM: Which EMS Stock is a Better Investment Right Now?

Celestica Inc. CLS and Sanmina Corporation SANM are two leading players in the electronics manufacturing services (EMS) industry. The EMS industry is rapidly evolving and is expected to grow at a steady pace in the upcoming years. Growing digital transformation initiatives, AI data center expansion, expanding consumer electronics and IoT markets, 5G adoption and automotive innovation are major growth drivers. Per Business Research Insights, the EMS industry is expected to witness a 6.06% compound annual growth rate. With in-depth expertise, both Celestica and Sanmina are well-positioned to capitalize on these emerging trends.Sanmina Corporation is a global provider of electronics contract manufacturing services. It focuses on engineering and fabricating complex components and also on providing complete end-to-end supply chain solutions to Original Equipment Manufacturers across various end markets.Operating as one of the leading EMS companies, CLS primarily serves original equipment manufacturers, cloud-based and other service providers and enterprises from several domains. It provides a comprehensive range of manufacturing and supply-chain solutions related to design and development, new product introduction, engineering services, component sourcing, electronics manufacturing and assembly, testing, systems integration, logistics and various other services.The Case for SanminaStrengthening technology leadership combined with a customer-focused approach is the cornerstone of Sanmina’s long-term growth strategy. It prioritizes expanding into high-growth industries backed by its strong global network, deep expertise and unique value proposition in advanced electronics manufacturing. Attracting and developing strong customer relationships by delivering high-level customer service is one of the key strategies to drive commercial expansion.SANM’s comprehensive portfolio offers product designing, manufacturing, assembling, testing and aftermarket support. Such an end-to-end approach enables customers to rely on a single partner throughout the product lifecycle management. Moreover, the company’s strong presence across industries strengthens its business resilience by mitigating risks associated with economic downturns in any single industry.This strategy, combined with the dynamic manufacturing approach, allows Sanmina to serve its customers despite growing geopolitical volatility and tariff-related uncertainties. This makes the company a preferred choice for organizations amid growing supply-chain disruptions worldwide.In the third quarter, end-market-wise, Industrial & Energy, Medical, Defense & Aerospace, and Automotive markets generated $1.247 billion in revenues, down from $1.253 billion. The company generated $849 million from Communications Networks and Cloud Infrastructure, up from $765 million a year ago.In the recent quarter, the times interest earned was 17.8. Higher times interest earned indicates the company is better equipped to cover interest expenses. SANM’s current ratio (a measure of liquidity) stood at 1.72 at the end of the fourth quarter of fiscal 2024, while the quick ratio is 1.02. A current ratio of more than 1 suggests the company is well-positioned to pay off its short-term debt obligations. SANM’s debt-to-capital ratio is 10.6% compared to 11.8% a year ago. The EMS industry’s debt-to-capital ratio stands at 37.9%. Such a strong liquidity position will enable Sanmina to steadily invest in growth initiatives.The Case for CelesticaCelestica is also experiencing healthy traction in the AI data center market, backed by its comprehensive portfolio. Enterprises across several industries, from financial services, healthcare, automotive and consumer electronics, are increasingly digitalizing their operations. The growing AI proliferation is driving demand for CLS’ enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and servers and storage-related products.Celestica witnessed 43.2% year-over-year sales growth in the Connectivity & Cloud Solutions segment. The hardware platform solutions portfolio registered solid growth backed by hyperscale customer demand for networking products, including 400G switches and 800G switches. The company’s top-line growth was impeded by weakness in the Advanced Technology segment, which was down 4.1% year over year in the recent quarter. Persistent weakness in the ATS segment over the past few quarters is a concern. Elevated inventory levels in the Industrial end markets are primarily hindering net sales growth in this segment. Although demand has stabilized, macroeconomic challenges remain headwinds.In the third quarter of 2025, Celestica generated $126.2 million in cash from operations compared with $122.8 million in the year-ago quarter. Free cash flow was $88.9 million, up 15.7% year over year. Its focus on improving capital management is a positive. CLS’ current ratio is 1.47, while the quick ratio is 0.88. Despite having a current ratio higher than 1, a lower quick ratio indicates that the company may not be able to fulfill its short-term debt obligation without selling inventory. The company’s debt-to-capital ratio stands at 27.9% compared to the industry’s 37.9%.How Do Zacks Estimates Compare for CLS & SANM?The Zacks Consensus Estimate for Sanmina’s full-year sales implies year-over-year growth of 72.24%, while that of EPS suggests growth of 59.6%. The EPS estimates have been trending northward over the past 60 days.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Celestica’s 2025 sales and EPS implies year-over-year growth of 26.34% and 52.06%, respectively. The EPS estimates have increased over the past 60 days.Image Source: Zacks Investment ResearchPrice Performance & Valuation of CLS & SANMOver the past year, Celestica has gained 280.1%, while SANM has gained 105% over the same period.Image Source: Zacks Investment ResearchSANM looks more attractive than Celestica from a valuation standpoint. Going by the price/earnings ratio, Sanmina’s shares currently trade at 16.45 forward earnings, lower than 42.36 for Celestica.Image Source: Zacks Investment ResearchCLS or SANM: Which is a Better Pick?Celestica and Sanmina both sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.Both companies are witnessing strong demand across multiple verticals. Their diverse market presence and comprehensive portfolio offerings augment their resilience in the business model amid growing macroeconomic challenges. However, Sanmina’s stronger liquidity position is a major advantage. With an attractive valuation, Sanmina seems to be a better investment option at the moment.Zacks Naming Top 10 Stocks for 2026Want to be tipped off early to our 10 top picks for the entirety of 2026? History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2025, the Zacks Top 10 Stocks gained +2,530.8%, more than QUADRUPLING the S&P 500’s +570.3%.Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2026. Don’t miss your chance to get in on these stocks when they’re released on January 5. Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Celestica, Inc. (CLS): Free Stock Analysis Report Sanmina Corporation (SANM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks