electronics manufacturer Celestica (NYSE:CLS) the stock has shown exceptional relative strength up nearly 10% for 2022. Celestica is outperforming benchmarks and is poised to rise. The company thrives during supply chain and logistics disruption as it provides aftermarket sourcing, manufacturing, assembly, testing, repair and return services. Its acquisition of electronics manufacturer supplier PCI was immediately accretive and serves as a synergistic component in its overall portfolio of lifecycle solutions. It sees a return to revenue growth in the ATS, Communications and Enterprise end markets. Operating margins continue to improve as stocks trade at a cheap P/E of 7.7. Cautious investors looking for exposure to a supply chain solutions player can watch for opportunistic pullbacks in Celestica shares.
Publication of results for the fourth quarter of fiscal 2022
On December 16, 2021, Jabil released its first quarter fiscal 2021 results for the quarter ending December 2021. The company reported earnings per share (EPS) of $0.44 compared to analyst consensus estimates. of $0.38, a beat of $0.06. Revenue rose 9.1% year-over-year (YoY) to $1.51 billion, matching analyst estimates of $1.51 billion. Diversified Manufacturing Services (DMS) revenue increased 11% year-over-year. Revenue from Electronic Manufacturing Services (EMS) increased 7% year-on-year. Celestica CEO Rob Mionis said, “Celestica’s strong performance in the fourth quarter capped off a successful 2021 for our business. We returned to year-over-year revenue growth, our non-IFRS operating margin of 4.9% marked a new record high, our non-IFRS adjusted EPS of $0.44 was our highest in more than 20 years, and we have completed our acquisition of PCI.
Celestica raised its first-quarter 2022 EPS guidance to a range of $0.31 to $0.37 from analysts’ estimate of $0.31. Revenue is expected to be between $1.40 billion and $1.55 billion, versus $1.42 billion according to consensus analyst estimates. The company expects fiscal 2022 revenue of between $6.30 billion and $6.33 billion and 2022 non-IFRS operating margin targets of 4% to 5%.
Takeaways from the conference call
CEO Mionis noted that his first three-year acquisition, PCI, was immediately accretive in addition to achieving revenue growth in the fourth quarter of 2021. His hardware platform solutions (HPS) saw growth of 34% year-over-year to reach $1.15 billion in sales as they continue to gain market share. and drive growth in its CCS segment. The ATS segment increased sales to $750 million and the company expects at least double-digit growth in 2022, supported by continued strength in the capital goods sector, accelerating industrial PCI and the continued recovery in the aerospace and defense segments. He concluded: “While 2022 should by no means be without its share of challenges. We plan to build on the positive momentum we established in 2021 and lead the business to another year of strong financial performance by delivering on our strategic and operational objectives. »
Celestica CFO Mandeep Chawla noted that Cisco’s exit was offset by 5% growth in its non-tax portfolio driven by service provider customers. HPS business grew 66% year-over-year to $350 million in Q4 2021. ATS margin increased 170 basis points year-over-year, driving a segment margin of 5.6%. The company generated $115 million in free cash flow and ended 2021 with $1 billion in cash, including $370 million in cash and 124.7 million shares outstanding.
CLS Opportunistic Withdrawal Levels
Using the rifle charts on the weekly and daily time frames provides an accurate view of the landscape for the CLS stock. Rifles chart weekly uptrend peaked at $13.41 Fibonacci level (fib). The weekly Rifle chart has a puppy breakout with rising 5-period moving average (MA) support at $11.85 followed by the 15-period MA at $11.25. The weekly upper Bollinger Bands overlap near the $13.41 fib level. The weekly stochastic tries to mini-pup under the 80 band. The weekly weak market structure (MSL) buy triggers on a break through $11.35. The daily Rifles chart has a make or break with a flattened 5-period MA at $12.07 attempting to form a puppy breakout. The daily Stochastic has a mini reverse pup that stalls at the 70 band to cross over or break down. Daily top BBs sit at $13.59 as they expand. Cautious investors can look for opportunistic pullback levels at the $11.38, $10.53, $9.93, $9.33, $8.58, $7.98, and $7.40 level. The upward trajectories range from the $17.75 fib to the $20.65 fib level.
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