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Is Celestica (CLS) Stock Undervalued Right Now?

·3 min read

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

One company value investors might notice is Celestica (CLS). CLS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 8.59, while its industry has an average P/E of 16.70. Over the past 52 weeks, CLS's Forward P/E has been as high as 12.38 and as low as 3.61, with a median of 8.63.

Another notable valuation metric for CLS is its P/B ratio of 0.78. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.79. CLS's P/B has been as high as 0.85 and as low as 0.27, with a median of 0.67, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CLS has a P/S ratio of 0.2. This compares to its industry's average P/S of 0.37.

Finally, investors will want to recognize that CLS has a P/CF ratio of 5.91. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CLS's current P/CF looks attractive when compared to its industry's average P/CF of 6.35. CLS's P/CF has been as high as 9.09 and as low as 1.77, with a median of 6.29, all within the past year.

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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