Surging Earnings Estimates Signal Upside for Celestica (CLS) Stock

Celestica (CLS) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this electronics manufacturing services company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.Consensus earnings estimates for the next quarter and full year have moved considerably higher for Celestica, as there has been strong agreement among the covering analysts in raising estimates.The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:12 Month EPSCurrent-Quarter Estimate RevisionsThe earnings estimate of $1.73 per share for the current quarter represents a change of +55.9% from the number reported a year ago.Over the last 30 days, three estimates have moved higher for Celestica compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 17.03%.Current-Year Estimate RevisionsFor the full year, the earnings estimate of $5.90 per share represents a change of +52.1% from the year-ago number.The revisions trend for the current year also appears quite promising for Celestica, with three estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 7.9%.Favorable Zacks RankThe promising estimate revisions have helped Celestica earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.Bottom LineInvestors have been betting on Celestica because of its solid estimate revisions, as evident from the stock's 31.2% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>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