Why Shares of Celestica Surged Today

By Timothy Green Markets Fool.com

Image source: Celestica.

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What happened

Shares of supply chains solutions provider Celestica (NYSE: CLS) jumped on Friday after the company reported its fourth-quarter results. Celestica beat analyst estimates for both revenue and earnings, and exceeded its own guidance. At 11:15 a.m., the stock was up about 11%.

So what

Celestica reported fourth-quarter revenue of $1.62 billion, up 7% year over year and $70 million higher than the average analyst estimate. The communications end market accounted for 44% of revenue, up from 38% during the fourth quarter of 2015. The diversified end market was flat in terms of revenue, with its share of total revenue dropping three percentage points, to 27%.

Non-IFRS earnings per share (EPS) came in at $0.41, up from $0.27 during the prior-year period and $0.09 above analyst expectations. On an IFRS (International Financial Reporting Standards) basis, EPS rose to $0.15, up from $0.08. A net benefit of $0.07 per share from income taxes partially offset a negative $0.17 per-share impact from restructuring related the Celestica's decision to exit the solar panel manufacturing business.

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Now what

Celestica CEO Rob Mionis summed up the company's progress in 2016:

We are proud of our many accomplishments this year. I am pleased with the progress we have made in setting the foundation for our strategy and delivering on our priorities and I am excited about the momentum we are building as we continue to drive profitable growth and increase shareholder value.

Celestica expects to produce between $1.4 billion and $1.5 billion of revenue during the first quarter of 2017, along with non-IFRS EPS in the range of $0.24 to $0.30. IFRS earnings will be negatively impacted by between $0.11 and $0.17 per share due to stock-based-compensation expense, amortization of intangible assets, and further restructuring charges.

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Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.