Is Celestica’s AI Fueled Surge Still Justified After Its Massive 2024 Share Price Run?

• If you are wondering whether Celestica’s strong run is already priced in, or if there is still value on the table, this piece will walk through the key signals investors are watching.
• Despite a choppy week with the share price down 6.2%, the stock is still up 2.7% over the last month, 214.2% year to date, and 198.7% over the past year, with multi‑year gains in the thousands of percent range.
• These moves have been supported by growing enthusiasm around Celestica’s role as a design and manufacturing partner for high performance computing, networking, and other complex electronic systems. This positioning has put it in the slipstream of structural demand themes such as AI, cloud infrastructure, and advanced communications. Investors have also been responding to a series of contract wins and business momentum updates that indicate these tailwinds may be more than just a short‑term story.
• On our framework, Celestica only scores 1/6 on valuation checks. In the sections that follow, we will look at what different valuation methods are indicating and then conclude with a more holistic way to judge whether the current price reflects the company’s long‑term potential.

Celestica scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Celestica Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting future cash flows and then discounting them back to today, to reflect risk and the time value of money. For Celestica, the latest twelve month Free Cash Flow is about $379.5 Million, and analysts expect this to rise to around $651 Million by 2028. Beyond that, Simply Wall St extrapolates additional years, with projected Free Cash Flow in the 2035 range still sitting in the low $700 Million area, suggesting growth moderates after the next few years.

Using a 2 Stage Free Cash Flow to Equity model, these cash flows are discounted to an estimated intrinsic value of about $141.67 per share. Compared with the current market price, the model implies the stock is roughly 197.7% overvalued. In other words, investors are paying a substantial premium over what the cash flow projections support right now.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Celestica may be overvalued by 197.7%. Discover 907 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Celestica.

Approach 2: Celestica Price vs Earnings

For profitable companies like Celestica, the Price to Earnings, or PE, ratio is a useful way to judge whether investors are paying a reasonable price for each dollar of current earnings. What counts as a fair PE depends on how fast earnings are expected to grow and how risky those earnings are, with higher growth and lower perceived risk usually justifying a higher multiple.

Celestica currently trades on a PE of about 49.18x, which is well above both the broader Electronic industry average of roughly 25.85x and the peer group average of around 33.50x. Simply Wall St also estimates a Fair Ratio for Celestica of 48.05x, which reflects what investors might reasonably pay given its earnings growth outlook, profitability, industry positioning, market cap and risk profile.

This Fair Ratio framework is more tailored than a simple comparison to industry or peer averages, because it adjusts for company specific factors rather than assuming all firms deserve the same multiple. With Celestica’s actual PE only modestly higher than the Fair Ratio, the stock appears slightly expensive on earnings, but not wildly out of line with what its fundamentals might warrant.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1448 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Celestica Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an easy tool on Simply Wall St’s Community page that lets you attach a story, your assumptions for future revenue, earnings and margins, and ultimately a Fair Value to a company. It then continuously compares that Fair Value to the current price so you can judge whether to buy, hold, or sell, with the numbers updating dynamically as new news or earnings arrive. For Celestica, for example, one investor might build a bullish Narrative around rapid AI infrastructure demand, margin expansion and sustained double digit growth that supports a Fair Value closer to the upper end of community estimates near CA$570. A more cautious investor might instead focus on customer concentration risk, execution challenges in 1.6T product ramps and cyclical hyperscaler spending, leading them to a much lower Fair Value that prices in slower growth and multiple compression. Narratives makes these different perspectives transparent, structured and comparable in one place so you can see which story best fits your own view of the business and the risks you are willing to take.

Do you think there's more to the story for Celestica? Head over to our Community to see what others are saying!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com