NEW YORK ( TheStreet) -- Celestica (NYSE: CLS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • CELESTICA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, CELESTICA INC increased its bottom line by earning $0.34 versus $0.23 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 849.2% when compared to the same quarter one year prior, rising from -$6.10 million to $45.70 million.
  • CLS's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems.
  • In its most recent trading session, CLS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The gross profit margin for CELESTICA INC is currently extremely low, coming in at 7.80%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 2.50% is above that of the industry average.

Celestica Inc. provides electronics manufacturing services and solutions to original equipment manufacturers (OEMs) in the consumer, communications, enterprise computing, industrial, aerospace and defense, healthcare, and green technology sectors in Asia, the Americas, and Europe. The company has a P/E ratio of 15.1, above the average electronics industry P/E ratio of 12.7 and below the S&P 500 P/E ratio of 17.7. Celestica has a market cap of $1.5 billion and is part of the technology sector and electronics industry. Shares are down 20.9% year to date as of the close of trading on Thursday.

You can view the full Celestica Ratings Report or get investment ideas from our investment research center.
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