Hitting a fresh 52-week high of $101 a share on Monday, Celestica CLS stock has soared over +240% in the last year.

As one of the world’s largest electronics manufacturing services companies, it may be worth discussing whether higher highs are in store for Celestica stock.

Providing printed circuit assembly (PSA) and system assembly solutions, Celestica’s reach also extends to post-manufacturing support to many of the world’s leading original equipment manufacturers in the computer and communication markets.

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AI Data Center Boost

Speaking to Celestica’s breadth, the company has been a prime beneficiary of AI infrastructure growth.

Specifically, Celestica offers a range of cloud-optimized hardware solutions that are designed for cloud computing and AI data center technologies with some of its key customers including Dell Technologies DELL, Hewlett-Packard  HPE , IBM  IBM, and Oracle ORCL.

Celestica’s Record Revenue

Celestica has seen expansive top line growth thanks to its data center infrastructure and cloud computing components. Most recently, Celestica reported record third quarter sales of $2.49 billion in October which spiked 22% year over year. Overall, Celestica’s total sales are now expected to increase 20% in fiscal 2024 to what would be a record $9.6 billion. Plus, FY25 sales are projected to expand another 8%.  

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Celestica’s Increased Probability

Additionally, Celestica has seen record margins which has led to a peak in probability. Attributed to effective cost management, Celestica’s adjusted gross margin increased 90 basis points during Q3 to 10.7%.

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On the bottom line, Q3 EPS climbed 60% to a peak of $1.04 compared to $0.65 a share in the comparative quarter. 58% EPS growth is now expected in FY24 with annual earnings forecasted to increase another 15% in FY25 to $4.44 per share.

More intriguing is that Celestica has posted an average earnings surprise of 13.21% in its last four quarterly reports and has now reached or exceeded the Zacks EPS Consensus for 22 consecutive quarters, dating back to July of 2019.

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Monitoring Celestica’s Valuation

At current levels, Celestica stock trades at 21.8X forward earnings which is roughly on par with the benchmark S&P 500 but above its Zacks Electronics-Manufacturing Services Industry average of 18.2X. Celestica does trade below the optimum level of less than 2X sales but above its industry average of 0.6X.

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Bottom Line

After such an incredible rally over the last year, Celestica stock lands a Zacks Rank #3 (Hold). Still, there is a lot to like about Celestica’s outlook especially as it relates to the ability to benefit from AI data center expansion. When considering this narrative and Celestica’s strong management, there is certainly the plausibility that long-term investors may continue to be rewarded.

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