CELESTICA INC (NYSE:CLS) – A Quality Stock with Strong Profitability and Growth

CELESTICA INC (NYSE:CLS) was identified through our Caviar Cruise screen, which focuses on high-quality companies with strong financial metrics. CLS stands out due to its solid profitability, efficient capital allocation, and consistent growth. Below, we examine why this stock may appeal to quality-focused investors.

Key Strengths of CELESTICA INC

• High Return on Invested Capital (ROIC): CLS has an impressive 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 has delivered a 42.42% annual EBIT growth 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.
• Exceptional Profit Quality: The five-year average Profit Quality stands at 151.44%, meaning the company converts net income into free cash flow at an outstanding rate.

Fundamental Analysis Summary

Our fundamental report gives CLS an overall score of 6 out of 10, with notable strengths in profitability and growth. Key takeaways:

• Profitability (Score: 8/10): High ROIC (17.26%), strong Return on Equity (27.13%), and improving margins.
• Growth (Score: 8/10): Revenue grew by 21.05% in the past year, with EPS expanding at 51.06%. Analysts expect continued growth.
• Valuation (Score: 4/10): The stock trades at a P/E of 29.97, slightly above the S&P 500 average, but growth prospects may justify the premium.

For investors seeking quality stocks, CLS presents a compelling case with its strong fundamentals and growth trajectory.

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

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own analysis before making investment decisions.