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Should Value Investors Buy Celestica (CLS) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Celestica (CLS). CLS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 8.83 right now. For comparison, its industry sports an average P/E of 16.41. Over the past year, CLS's Forward P/E has been as high as 16.31 and as low as 3.61, with a median of 9.63.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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 0.13. This compares to its industry's average P/S of 0.25.

Finally, investors will want to recognize that CLS has a P/CF ratio of 6.72. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.89. Over the past year, CLS's P/CF has been as high as 7.37 and as low as 1.77, with a median of 3.59.

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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