Celestica Inc. CLS and Plexus Corp PLXS are two leading players in the electronics manufacturing services (EMS) industry. Celestica is one of the largest EMS companies in the world, primarily serving original equipment manufacturers, cloud-based and other service providers, and business enterprises across several industries. The company offers a comprehensive range of manufacturing and supply-chain solutions related to design and development, new product introduction, engineering services, component sourcing, assembly, testing, systems integration and logistics.
Plexus is also a leading provider of electronic contract manufacturing services to OEMs across a wide range of industries, including Healthcare/Life Sciences, Industrial and Aerospace/Defense market sectors. Additionally, the company provides after-market services to support customers in all regions where it operates.
With domain-specific expertise in core areas, both Celestica and Plexus are strategically positioned in the EMS landscape, possessing deep industry expertise to cater to the evolving demands of business enterprises. Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the industry.
The Case for PLXS
Plexus is witnessing healthy traction in the Healthcare/Life Sciences segment, backed by growing demand for its sustaining services. Demand also remains strong in the Aerospace/Defense sector, backed by strong customer wins in the defense and space subsectors. The company’s focus on expanding its space product portfolio and engineering device services is fostering growth. A healthy number of program ramps are expected to drive the top-line performance for the company.
At the end of the second quarter, Plexus’ debt-to-capital ratio stands at 0.13 compared to the industry average of 0.46. Its current ratio is 1.53 compared to the industry average of 1.19. A current ratio above 1 suggests that a company is well-positioned to meet its short-term obligations. Its times interest earned is 9.4. Management is placing greater emphasis on operational discipline and inventory reduction to generate greater cash flow. The robust cash generation positions Plexus to invest in growth initiatives and maximize shareholder value.
However, weakness in the Industrial sector, owing to demand softness in multiple end markets, is affecting net sales growth. The company is facing intensifying competition in the industry from Celestica, Jabil Inc. JBL and Sanmina Corporation. Moreover, the company derives a lion's share of its revenues from a few large customers. This exposes it to customer concentration risks. Given the competitive nature of the industry, the loss of any one of its key customers would significantly impact its results.
The Case for Celestica
Celestica’s enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, and edge solutions, is witnessing solid traction backed by growing AI proliferation across industries. The next-generation, 2U rackmount all-flash storage controller, Celestica SC6100, is gaining popularity for the most demanding enterprise application workloads. High-bandwidth demands of data center networking set to drive adoption of Celestica DS4100, a 1U 800G per port top-of-rack, leaf/spine switch designed with Broadcom’s TH4-12.8T switch chipset.
The company boasts a vast customer base, which includes several leading manufacturers from multiple industries, including communication, healthcare, aerospace and defense, energy, semiconductor and various cloud-based and other service providers. Such a diverse customer base enhances business resilience by reducing dependence on a single industry and minimizing the effects on financial results from an economic downturn in one specific sector.
The company’s debt-to-capital ratio stands at 0.37 compared to the industry average of 0.46. Its current ratio is 1.43. Times interest earned has improved to 11.4 in 2025 from 11.2 in 2024 and 4.9 in 2023. This indicates a robust improvement in its ability to match its interest rate obligations. Improvement in liquidity combined with healthy growth in cash flow enables it to expand its portfolio, drive innovation and pay off debt.
However, the company faces intense competition from companies such as Foxconn, Jabil, Plexus and Sanmina. Aggressive pricing and technology-driven demand shifts have negatively impacted Celestica’s Connectivity & Cloud Solutions business. Jabil’s growing prowess in the most demanding enterprise application workloads is a major concern. The company derives major shares of its revenue outside the United States, and it relies on China for a part of its manufacturing, design, support and storage operations. China’s strained bilateral trade relationship with the United States remains a major headwind for the company.
How Do Zacks Estimates Compare for CLS & PLXS?
The Zacks Consensus Estimate for Celestica’s 2025 sales and EPS implies year-over-year growth of 13.15% and 30.15%, respectively. The EPS estimate for 2025 and 2026 has been trending northward over the past 60 days.
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The Zacks Consensus Estimate for Plexus’s 2025 sales implies a year-over-year growth of 2.64%, while that of EPS suggests growth of 20.98%. The EPS estimate for 2025 has remained unchanged for the past 60 days, while the estimate for 2026 trending southward during this period.
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Price Performance & Valuation of CLS & PLXS
Over the past year, Celestica has gained 112.4% compared with the industry’s growth of 46.7%. Plexus has gained 15.2% over the same period.
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Plexus looks more attractive than Celestica from a valuation standpoint. Going by the price/earnings ratio, Plexus’s shares currently trade at 17.98 forward earnings, lower than 20.69 for Celestica.
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CLS or PLXS: Which is a Better Pick?
Celestica and Plexus carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both Celestica and Plexus boast a strong liquidity position and focus on improving cash flow over the next few quarters. However, Celestica's prudent, AI-focused approach is enabling it to tap into the booming demand for data center, AI, and cloud technologies. The company recorded impressive revenue and EBITDA growth, while Plexus is facing a bumpy road. With a better price performance and strong momentum, Celestica seems to be a better investment option at the moment.
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