Episode
Celestica Stock: Beat, Raised Guidance & CCS +84% on AI — So Why We Say HOLD (CLS Q2 2026)
- Published
- Jul 28, 2026
- Duration seconds
- 832
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Summary
Celestica Inc. (CLS) Q2 2026 — Celestica (CLS), the electronics-manufacturing-services (EMS) firm that has become the quiet backbone of the AI data center, delivered another clean beat-and-raise for Q2 2026: adjusted (non-GAAP) EPS of $2.54 topped the ~$2.30 estimate (+83% YoY) on revenue of $4.70B (+62% YoY), with a record 8.2% adjusted operating margin. GAAP EPS was $3.17 (flattered by a one-time total-return-swap gain). The AI engine is the CCS segment — connectivity & cloud — up 84% to $3.81B (~81% of revenue), including ~$1.9B of higher-value HPS (Hardware Platform Solutions), up 58%; the steadier ATS segment rose 8% to $0.89B. Management raised FY2026 guidance again to $20.5B revenue (+65%), $11.30 adjusted EPS (+87%), 8.4% adjusted operating margin and ~$600M free cash flow, and guided Q3 to $5.25-5.55B / $2.88-3.08 adjusted EPS. The stock popped ~5% to ~$320, still ~33% below its $474 high. But it's a structurally low-margin (~12% gross, ~8% operating) contract manufacturer re-rated to ~28x forward earnings and a ~1.5% free-cash-flow yield — with free cash flow roughly flat while earnings triple, as the AI capex + working-capital ramp eats cash. Even our AI-supercycle-leaning, normalized owner-earnings DCF lands near $275. Our call: HOLD, 2/5. Celestica is the quiet backbone of the AI data center — an electronics-manufacturing-services (EMS) firm, a contract manufacturer that designs and builds the networking switches, servers and storage hyperscalers rack up by the thousand. Q2 2026 was another excellent quarter: adjusted (non-GAAP) EPS of $2.54 beat the ~$2.30 estimate (+83% YoY), revenue rose 62% to $4.70B, and adjusted operating margin hit a record 8.2% (GAAP EPS was $3.17, flattered by a one-time swap gain). The AI engine is the CCS segment, up 84% to…