Contract electronics manufacturer Celestica beat analyst estimates for the third quarter but disappointed with its sales guidance. CLS stock fell hard Thursday on the news.
The Toronto-based company said late Wednesday that it earned an adjusted 65 cents a share on sales of $2.04 billion in the September quarter. Analysts polled by FactSet had expected earnings of 60 cents a share on sales of $1.99 billion. On a year-over-year basis, Celestica earnings rose 25% while sales climbed 6%.
For the current quarter, Celestica predicted adjusted earnings of 68 cents a share on sales of $2.08 billion. That's based on the midpoint of its guidance. Analysts had been looking for earnings of 65 cents a share on sales of $2.13 billion. In the year-earlier period, Celestica earned 56 cents a share on sales of $2.04 billion.
Celestica said it expects revenue growth across its business segments in 2024, driven by secular tailwinds and new program wins. It forecast adjusted earnings per share to grow by 10% or more next year. This year, it sees earnings rising 24% with sales increasing 9%.
CLS Stock Tanks After Report
On the stock market today, CLS stock tumbled 10.4% to close at 22.68.
On Oct. 16, CLS stock hit a 21-year high of 27.58.
Celestica has two business segments: Advanced Technology Solutions and Connectivity & Cloud Solutions. The former serves the aerospace and defense, industrial and health care industries. The latter makes communications and enterprise computing gear.
In the third quarter, Celestica's Advanced Technology Solutions unit grew revenue by 12% from the prior year. However, the Connectivity & Cloud Solutions unit posted only a 2% increase in sales.
Flex To Spin Off Remaining Nextracker Stake
Meanwhile, industry peer Flex also reported September-quarter results late Wednesday.
Austin, Texas-based Flex earned an adjusted 68 cents a share on sales of $7.47 billion in its fiscal second quarter ended Sept. 29. Analysts had expected earnings of 58 cents a share on sales of $7.52 billion. On a year-over-year basis, Flex earnings rose 8% while sales fell 4%.
For the current quarter, Flex expects to earn an adjusted 61 cents a share on sales of $6.7 billion. That's based on the midpoint of its outlook. Wall Street was modeling earnings of 64 cents a share on sales of $8.04 billion. In the year-earlier period, Flex earned 62 cents a share on sales of $7.8 billion.
Flex tempered its sales miss and soft guidance with news that it plans to spin off the remaining shares of its Nextracker subsidiary to Flex shareholders. It expects to complete the transaction in its fiscal fourth quarter ending March 31.
On Thursday, Flex stock jumped 11% to close at 25.77.
Flex stock and CLS stock are both on the IBD Tech Leaders list.
Celestica ranks first out of 15 stocks in IBD's Electronics-Contract Manufacturing industry group, according to IBD Stock Checkup. Flex ranks No. 5 in the group.
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