Celestica (TSX:CLS) Stock Still Looks Reasonable On Its Huge 5 Year Run
Celestica stock has delivered a very large 5 year return while the latest valuation checks suggest the shares still trade at a discount to an estimate of intrinsic value based on a Discounted Cash Flow (DCF) model.
- Over the past 5 years, Celestica has returned about 41x, which puts extra focus on whether the current share price can still be justified by fundamentals.
- Recent upgrades to longer term revenue expectations may support the higher valuation, while any disappointment on future cash flow delivery could weigh heavily on what investors are willing to pay.
- Celestica screens as undervalued on 5 of 6 checks, which means the broader valuation work leans cheap based on this 5 out of 6 score.
The issue now is whether Celestica's current price properly reflects the intrinsic value estimate and the sustainability of its recent results driven gains.
Does Celestica Look Undervalued on Cash Flow?
The Discounted Cash Flow (DCF) model here projects what Celestica’s future free cash flows could be worth in today’s money. On the latest figures, the company generated about $731 million in free cash flow over the last twelve months, and the model assumes these cash flows continue growing rather than shrinking. That stream is then discounted back using a 2 Stage Free Cash Flow to Equity approach to account for both an earlier, faster growth phase and a later, steadier phase.
On these assumptions, the DCF points to an estimated intrinsic value of about CA$735 per share, which is above the current market price and implies the stock is 36.9% undervalued. Celestica’s recent Q2 earnings and revenue beat, along with the higher 2026 outlook, helps explain why analysts are comfortable with a growing cash flow profile that underpins this higher valuation range.
Putting it together, the DCF work suggests Celestica stock currently screens as undervalued relative to its projected cash flows.
Our Discounted Cash Flow (DCF) analysis suggests Celestica is undervalued by 36.9%. Track this in your watchlist or portfolio, or discover 7 more high quality undervalued stocks.
Does Celestica Look Undervalued on Earnings?
The P/E ratio is a relevant metric for Celestica because earnings are a key focus for investors following its recent results and raised 2026 outlook. Celestica currently trades on a P/E of about 34.1x, which is very close to the peer average of 34.9x and above the Electronic industry average of about 27.4x. On simple comparisons, the stock does not look obviously cheap or expensive versus direct peers, although it does sit at a premium to the broader sector.
The Fair Ratio model, which weighs factors such as growth expectations, margins, size and risk, indicates a higher P/E of about 66.5x for Celestica. That is almost double the current multiple. On this more tailored benchmark the stock appears to screen as undervalued, even after the strong share price performance and recent earnings results.
On the P/E multiple, Celestica stock appears undervalued relative to what the Fair Ratio model indicates investors might typically pay for its earnings profile.
See what the numbers say about this price — find out in our valuation breakdown.
The Celestica Narrative: What Would Justify Today's Price?
Simply Wall St Narratives for Celestica pick up where the valuation work leaves off and focus on what would need to be true about Celestica's future growth, margins and earnings for the stock to be worth materially more or less than it is today on the market. Rather than stopping at a single P/E or DCF output, they unpack the future story that number relies on so you can watch how those assumptions play out over time on the Community page.
You can add your voice to the Celestica story by sharing a Narrative that lays out your number driven view on whether its recent earnings beat and raised 2026 outlook ultimately deliver. Set out your thesis today and track how it holds up as new results and guidance arrive.
Do you think there's more to the story for Celestica? Head over to our Community to see what others are saying!
The Bottom Line
For Celestica, both the Discounted Cash Flow (DCF) intrinsic value estimate and the earnings based multiples point to an undervalued stock, even after a very strong 5 year run. The main question now is whether the cash flow and margin profile that underpin those models holds up as expectations reset after recent results and guidance. If Celestica continues to meet the cash flow and earnings assumptions embedded in the DCF and Fair Ratio work, the current discount can look justified. If those assumptions slip, the recent move could prove to have pulled forward a lot of future returns.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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