CELESTICA INC (NYSE:CLS) – A Quality Stock with Strong Fundamentals

CELESTICA INC (NYSE:CLS) was identified by our Caviar Cruise quality stock screener, which focuses on companies with strong financial health, profitability, and growth potential. CLS stands out due to its high return on invested capital, improving margins, and solid cash flow generation. Below, we examine why this stock fits the criteria for quality investors.

Key Strengths of CELESTICA INC

• High Return on Invested Capital (ROIC): CLS has an ROIC of 26.09%, well above the 15% threshold for quality stocks. This indicates efficient use of capital to generate profits.
• Strong EBIT Growth: The company’s EBIT has grown at a 42.42% annual rate over the past five years, reflecting improving operational efficiency.
• Healthy Debt Management: With a Debt-to-Free Cash Flow ratio of 3.08, CLS can repay its debt in just over three years using current cash flows, signaling financial stability.
• Profit Quality: CLS converts net income into free cash flow at an impressive rate, with a five-year average Profit Quality of 151.44%, far exceeding the 75% benchmark.

Fundamental Analysis Summary

Our fundamental report gives CLS a rating of 6 out of 10, highlighting its strengths in profitability and growth while noting minor concerns in liquidity. Key takeaways:

• Profitability (8/10): High ROIC, strong margins, and consistent earnings growth place CLS in the top tier of its industry.
• Growth (8/10): Revenue and earnings have expanded at double-digit rates, with analysts forecasting continued growth.
• Valuation (4/10): The stock trades at a premium compared to earnings, but its growth prospects may justify the valuation.

Our Caviar Cruise screener lists more quality stocks and is updated regularly.

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.