Will Top-Line Expansion Augment Celestica's (CLS) Q1 Earnings?

27 Apr 2024

Yahoo Finance

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Will TopLine Expansion Augment Celesticas CLS Q1 Earnings

Celestica (CLS) is expected to witness a top-line expansion year over year in the first quarter of 2024, backed by healthy demand in its networking portfolio.

Celestica, Inc. CLS is set to report its first-quarter 2024 results on Apr 24, after the closing bell. In the last reported quarter, the company beat the Zacks Consensus Estimate of 68 cents and delivered a trailing four-quarter earnings surprise of 8.77%, on average.

The company is expected to record revenue growth year over year, backed by strong demand for its manufacturing technology and service solutions. The introduction of next-generation networking hardware solutions to support the advanced use cases is bolstering its prospect.

Factors at Play

During the quarter, Celestica showcased that the combination of its data center switches and optical transceivers can support high volumes of both inbound and outbound network traffic. The company aims to unlock the potential of silicon photonics using Celestica 800G networking and facilitate low power, high bandwidth data transfer for advanced applications like AI, big data analytics and the cloud. This development is likely to have a positive impact on its first-quarter results.

In the quarter under review, the company expanded its hardware platform solutions portfolio with the launch of the DS1000 switch. Featuring 48 RJ45 ports supporting speeds of 10/100/1000 mbps, the DS1000 switch is engineered for both data center and enterprise access deployments. Support for open and third-party network operating systems empowers organizations to incorporate open-source technologies into their IT infrastructure. The flexible and efficient solution is tailored to modern networking needs. This is expected to have enhanced commercial prospects and supported the top line during the quarter.

For the March quarter, the Zacks Consensus Estimate for total revenues is pegged at $2.10 billion, which indicates growth from the year-ago quarter’s reported figure of $1.84 billion. The consensus estimate for adjusted earnings per share stands at 72 cents, up from 47 cents reported a year ago.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Celestica this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 72 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Celestica, Inc. Price and EPS Surprise

Celestica, Inc. price-eps-surprise | Celestica, Inc. Quote

Zacks Rank: Celestica currently has a Zacks Rank #3.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Qualcomm Incorporated QCOM is set to release quarterly numbers on May 1. It has an Earnings ESP of +0.11% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

United States Cellular Corporation USM is scheduled to report quarterly numbers on May 2. It has an Earnings ESP of +36.36% and sports Zacks Rank of 1.

The Earnings ESP for Silicon Motion Technology SIMO is +5.96% and it has a Zacks Rank of 2. The company is scheduled to report quarterly numbers on May 2.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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