Can Celestica’s Recent Stock Surge Continue After Latest Q1 Earnings Beat in 2025?

Thinking about adding Celestica to your portfolio, or maybe sitting on the fence about what to do next? You are not alone. This tech manufacturer has made waves recently, and its stock is attracting plenty of attention for good reason. After a modest dip of almost 5% in just one day and a steeper slide over the past week, you might think momentum is fading. But when you look at the bigger picture, it is clear something significant is happening. Over the last month, the stock is up 16%, and if you had bought a year ago, you would be sitting on a return of nearly 148%.

So, what is fueling all this action? Partly, it is strong revenue and net income growth, with both figures showing double-digit annual rates. This suggests that Celestica is performing well operationally. In addition, there is a growing sense among analysts that the company is finally shaking off some of its historical risks, as shown by a 21.6% discount to the average analyst price target right now. The story becomes more interesting when examining the numbers beneath the surface. When subjected to six standard valuation tests, Celestica comes out undervalued in just one, earning a value score of 1 out of 6.

Whether you are searching for growth potential or looking for a value play, how you judge Celestica depends on which approach you take. Next, we will look closely at the different methods investors use to assess value and explore why there may be an even smarter way to weigh Celestica's worth before making your decision.

Celestica delivered 248.0% returns over the last year. See how this stacks up to the rest of the Electronic industry.

Approach 1: Celestica Cash Flows

The Discounted Cash Flow (DCF) model is a popular valuation tool that estimates a company’s true worth by projecting its future cash flows and discounting them back to their present value. This method helps investors determine whether a stock is trading below or above its intrinsic value.

For Celestica, the most recent reported Free Cash Flow is CA$378.6 million. Analysts forecast that by 2035, this figure could climb to approximately CA$843.7 million, with steady annual growth over the period. Using a 2 Stage Free Cash Flow to Equity approach, the company’s intrinsic value is estimated at CA$168.14 per share based on these forward-looking cash flows.

Comparing this intrinsic value to Celestica’s current share price shows that the stock is about 52.3% overvalued according to the DCF model. This suggests that the market price is currently higher than what the projected cash generation would typically justify.

Result: OVERVALUED

Our DCF analysis suggests Celestica may be overvalued by 52.3%. Find undervalued stocks based on DCF analysis or create your own screener to find better value opportunities.

Approach 2: Celestica Price vs Earnings

The Price-to-Earnings (PE) ratio is a classic metric for valuing profitable companies because it compares what investors are willing to pay today for a dollar of earnings. For established, consistently profitable businesses like Celestica, the PE ratio offers a straightforward way to judge whether the stock is expensive or attractively priced relative to its earnings power.

It is important to remember that what counts as a “fair” PE ratio is not set in stone. Investor expectations for future growth, as well as the perceived risks facing the company, can influence the number upward or downward. Robust earnings growth or a strong competitive position usually justify a higher PE, while increased risks or slowing growth typically result in a lower PE.

Celestica is currently trading at a PE ratio of 39.45x. For context, the industry average sits much lower at 26.14x, and the average among similar peers is about 27.57x. Simply Wall St's proprietary Fair Ratio for Celestica, which takes into account its unique earnings growth profile, margins, and risk characteristics, comes to 41.43x. Since this Fair Ratio is very close to the company’s actual PE, it suggests the stock is priced just about right on an earnings basis.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Celestica Narrative

Narratives are a new and approachable way to invest, allowing you to give your perspective on where Celestica is headed by turning what you believe about its story into financial forecasts, which then drive a fair value for the shares.

Unlike traditional models that focus only on numbers, a Narrative connects a company’s unique circumstances, such as its growth opportunities, risks, and competitive position, to tangible estimates for future revenue, earnings, and profit margins. This helps clarify how the story you believe about the business translates into its fair value, making your investment logic much more actionable.

On the Simply Wall St platform, Narratives are easy to use and updated dynamically as new information emerges, keeping you and millions of other investors informed. These tools empower you to make decisions on when to buy or sell by comparing your Fair Value (based on your Narrative) with Celestica’s current share price.

For example, some investors may be very optimistic, forecasting $992 million in earnings by 2028 and seeing a Fair Value of CA$311.34, while more cautious investors might project just $784.7 million in earnings and a correspondingly lower fair value. Your Narrative guides your call.

Do you think there's more to the story for Celestica? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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