QS Research · Michael Burry's Scion Capital analyst template · 2006
CELESTICA INC (CLS)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: LONG
Conviction medium · base case +31% · downside -17% · upside +80%
CLS is not a broken business: Q3 2026 revenue rose 83% to $5.83B and adjusted EPS of $3.30 beat the high end, while FY2026 guidance was raised to $21.0B/$11.55 and the initial 2027 outlook is $40.0B/$21.50 (S31, S102). The market is focused on the FCF cut to $460M and the $1.5-$2.0B 2027 capex, but $3.14B of net cash (N21) and a 20.9x P/E (N28) leave the equity cheap if even a haircut 2027 plan is delivered. Using the TTM EBITDA base of $1.69B (N12) at today's 13.6x EV/EBITDA (N25): base +35% EBITDA = $2.28B, EV $31.0B + $3.14B net cash = $34.2B / 126.11M shares (N5) = ~$271 (+31%); downside -20% EBITDA = $1.35B, EV $18.4B + $3.14B = $21.5B / 126.11M = ~$171 (-17%); upside +90% EBITDA = $3.21B, EV $43.7B + $3.14B = $46.8B / 126.11M = ~$371 (+80%). The base and downside clear the long rule, but customer concentration and insider selling keep conviction medium rather than high.
Key numbers
- Share price: $206.68
- Market cap: $26.06B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $18.23B
- EV / EBITDA (TTM): 13.6x
- P/E (TTM): 20.9x
- Price / book: 4.19x
The 15 boxes
- ✓ 1. Long-form business notes
Celestica makes money as a contract design, manufacturing and supply-chain partner across two segments: CCS (Communications and Enterprise, including hyperscalers and OEMs) and ATS (A&D, Industrial, HealthTech and Capital Equipment), with a rising HPS/ODM design business. FY2025 revenue was $12.39B, operating income $1.04B and operating cash flow $659.5M, with HPS at 41% of revenue versus 15% in FY2020 and top-10 customer concentration at 79% versus 66% in FY2020. Between the oldest and newest annual reports, the mix shifted toward Communications/CCS, the segment margin characterization flipped to CCS higher-margin, and Energy appears in the FY2020 ATS list but not the FY2025 list.
- ✓ 2. Competitive advantage
CLS is in a highly competitive EMS/ODM industry with named larger competitors, aggressive bidding in CCS and no quantified moat; management's only stated advantage is a qualitative track record in advanced manufacturing, design, quality, delivery and complexity management. Customer concentration is very high (top 10 = 79% of 2025 revenue; three CCS customers at 32%, 14% and 12%) and customers can shift business, in-source or second-source, which weakens switching costs. The FY2022-FY2025 XBRL shows rising gross profit, operating income and operating cash flow, but the sources give no margins or ROIC, and 2026 capex steps up to ~$1B (~6% of anticipated revenue) versus a 1.5%-2.0% historical range, adding fixed-cost risk.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended September 30, 2026) was a blowout: revenue $5,829.7 million, up 83% from Q3 2025, with CCS up 102% and ATS up 23%, and adjusted EPS of $3.30 versus guidance of $2.88-$3.08. Gross margin fell to 11.0% from 13.0% largely because last year's quarter carried a $48.5 million TRS fair-value gain, so GAAP operating margin fell to 7.9% while adjusted operating margin rose to a record 8.5%. Management raised FY2026 revenue and adjusted EPS outlook ($21.0 billion / $11.55) but cut free cash flow outlook to $460 million, and gave an initial 2027 outlook of $40.0 billion revenue and $21.50 adjusted EPS. Balance sheet was transformed by the August 7, 2026 offering ($3,391.3 million net), taking cash to $3,961.3 million at September 30, 2026; no shares were repurchased for cancellation in the quarter and the 10-Q reports no material change to risk factors.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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