Celestica: A Trifecta Of Growth, Margin Expansion And Improving Cash Flow Conversion (Archive)
Celestica delivers rare simultaneous strength in growth, margin expansion and cash flow conversion.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- The growth outlook is strong, driven by tailwinds in the CCS segments' end markets.
- The mix-shift driven EBIT margin thesis is playing out and has more runway as the higher-margin CCS is expected to continue outgrowing ATS.
- Inventory reduction is improving net working capital intensity, which can lead to a higher base of FCF conversion.
- Valuations are at a 18.6% premium vs peers, but I think it is tolerable given the trifecta of growth, margin expansion and improving cash flow conversion.
- CLS stock is in a clear bullish uptrend. But multiple-expansion led price appreciation is a hype risk factor to monitor.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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