Is Trending Stock Celestica, Inc. (CLS) a Buy Now?

Celestica (CLS) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.Over the past month, shares of this electronics manufacturing services company have returned +14.4%, compared to the Zacks S&P 500 composite's +1.9% change. During this period, the Zacks Electronics - Manufacturing Services industry, which Celestica falls in, has gained 4.4%. The key question now is: What could be the stock's future direction?Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.Revisions to Earnings EstimatesRather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.For the current quarter, Celestica is expected to post earnings of $1.45 per share, indicating a change of +39.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.The consensus earnings estimate of $5.55 for the current fiscal year indicates a year-over-year change of +43%. This estimate has remained unchanged over the last 30 days.For the next fiscal year, the consensus earnings estimate of $6.78 indicates a change of +22.1% from what Celestica is expected to report a year ago. Over the past month, the estimate has changed +0.5%.With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #1 (Strong Buy) for Celestica.Projected Revenue GrowthEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.For Celestica, the consensus sales estimate for the current quarter of $3 billion indicates a year-over-year change of +20%. For the current and next fiscal years, $11.63 billion and $13.62 billion estimates indicate +20.6% and +17.1% changes, respectively.Last Reported Results and Surprise HistoryCelestica reported revenues of $2.89 billion in the last reported quarter, representing a year-over-year change of +21%. EPS of $1.39 for the same period compares with $0.91 a year ago.Compared to the Zacks Consensus Estimate of $2.67 billion, the reported revenues represent a surprise of +8.34%. The EPS surprise was +12.1%.Over the last four quarters, Celestica surpassed consensus EPS estimates three times. The company topped consensus revenue estimates three times over this period.ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.Celestica is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Celestica. However, its Zacks Rank #1 does suggest that it may outperform the broader market in the near term.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>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 ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks