Celestica Inc (NYSE:CLS) Passes the Caviar Cruise Quality Investing Screen

The Caviar Cruise stock screening method, influenced by Belgian author Luc Kroeze's work on quality investing, looks for companies with outstanding operational performance, lasting growth, and sound financial condition. This method highlights long-term ownership of businesses showing better revenue and profit growth, high returns on invested capital, acceptable debt levels, and good cash flow conversion. Instead of concentrating on low prices, quality investors favor businesses with lasting competitive edges and steady performance measures that point to continued success.

Celestica Inc (NYSE:CLS) appears as a noteworthy candidate through this strict screening process. The Toronto-based provider of supply chain solutions to worldwide equipment makers and service providers shows several traits that match the Caviar Cruise quality investing view.

Revenue and Profit Growth Performance The company's notable 18.86% five-year revenue compound annual growth rate greatly passes the screening limit of 5%, showing solid market position and need for its services across both its Advanced Technology Solutions and Connectivity & Cloud Solutions units. More notably, Celestica's EBIT growth of 42.42% over the same period not only goes beyond the needed 5% minimum but also greatly passes its revenue growth, a main screening condition that points to better operational effectiveness and possible pricing strength.

Outstanding Capital Allocation Celestica's most notable measure is its return on invested capital leaving out cash, goodwill, and intangibles, which hits 28.15%, much higher than the 15% limit needed by the Caviar Cruise screen. This outstanding ROIC shows the company's skill in creating large profits from its operational investments, a central part of quality investing that points to better management performance and competitive edges within the electronic equipment and components field.

Sound Financial Condition and Cash Conversion The company keeps a careful debt profile with a debt-to-free-cash-flow ratio of 2.27, much lower than the screen's highest limit of 5. This shows that Celestica could in theory pay off all existing debt in under two and a half years using present cash flow levels, a mark of financial steadiness that quality investors favor. Also, the company's five-year average profit quality of 151.44% greatly goes beyond the 75% requirement, showing that Celestica turns accounting profits into real cash flow at a notable rate, giving room for strategic investments, possible buys, or shareholder returns.

Fundamental Analysis Summary According to the detailed fundamental analysis, Celestica gets 6 out of 10 overall but displays specific strength in profitability (score 8) and health (score 7) measures. The company does better than most industry rivals in return on equity (30.63%), return on assets (8.63%), and operating margin (6.56%). While valuation seems high with a P/E ratio of 42.33, this might be reasonable given the company's outstanding growth outlook and profitability measures. The analysis mentions expected EPS growth of 30.31% and revenue growth of 18.86% in future years, pointing to continued progress.

Quality Investment Points Beyond the numerical measures, Celestica displays several non-numerical traits that quality investors appreciate: worldwide operations serving different end markets, placement within rising technology infrastructure movements, and tested management performance. The company's role in semiconductor, aerospace, healthcare technology, and cloud infrastructure units fits with long-term ongoing growth trends, while its asset-light model and focus on higher-value services indicate lasting competitive edges.

For investors curious to review other companies that meet the Caviar Cruise quality investing conditions, the full screening results give a wider set of possible quality investment candidates.

Disclaimer: This analysis is given for information only and does not form investment guidance, suggestion, or backing of any security. Investors should do their own study and talk with a qualified financial advisor before making investment choices.