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Is Celestica (CLS) Stock Undervalued Right Now?

·2 min read

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Celestica (CLS) is a stock many investors are watching right now. CLS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 7.78. This compares to its industry's average Forward P/E of 12.22. CLS's Forward P/E has been as high as 16.31 and as low as 3.61, with a median of 9.93, all within the past year.

Investors should also recognize that CLS has a P/B ratio of 0.68. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.79. Over the past 12 months, CLS's P/B has been as high as 0.87 and as low as 0.27, with a median of 0.68.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CLS has a P/S ratio of 0.16. This compares to its industry's average P/S of 0.26.

Value investors will likely look at more than just these metrics, but the above data helps show that Celestica is likely undervalued currently. And when considering the strength of its earnings outlook, CLS sticks out at as one of the market's strongest value stocks.


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