Q: Could CLS get a premium valuation similar to VRT and SCMI based on its forward earninggs and AI involvement?
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5i Research Answer:
It is possible, but may take some time. CLS until the past couple of years has had a habit of missing estimates and disappointing investors. Investors do have long memories. It is benefiting from AI, but much of its business is still lower margin, late-cycle business. Still, it has improved a lot, and the growth outlook is solid. We think its valuation multiple could increase if it can maintain its consistency and execute on expectations. It may not ever get the same mutliple as the others noted, though, as it is not a pure-play AI/data centre company.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in SMCI, VRT.