Critical Analysis: Avnet (NASDAQ:AVT) versus Celestica (NYSE:CLS)

Avnet (NASDAQ:AVT) and Celestica (NYSE:CLS) are both technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.

Volatility & Risk

Avnet has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500. Comparatively, Celestica has a beta of 2.1, suggesting that its share price is 110% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Avnet and Celestica, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avnet	1	2	2	1	2.50
Celestica	0	2	21	1	2.96

Avnet currently has a consensus target price of $93.25, suggesting a potential upside of 8.84%. Celestica has a consensus target price of $453.32, suggesting a potential upside of 91.83%. Given Celestica’s stronger consensus rating and higher possible upside, analysts clearly believe Celestica is more favorable than Avnet.

Profitability

This table compares Avnet and Celestica’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Avnet	1.21%	9.57%	3.47%
Celestica	6.83%	33.80%	10.88%

Valuation & Earnings

This table compares Avnet and Celestica”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avnet	$27.63 billion	0.25	$334.39 million	$3.99	21.47
Celestica	$12.39 billion	2.41	$832.50 million	$10.57	22.36

Celestica has lower revenue, but higher earnings than Avnet. Avnet is trading at a lower price-to-earnings ratio than Celestica, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

95.8% of Avnet shares are owned by institutional investors. Comparatively, 67.4% of Celestica shares are owned by institutional investors. 2.0% of Avnet shares are owned by insiders. Comparatively, 1.1% of Celestica shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Celestica beats Avnet on 11 of the 14 factors compared between the two stocks.

About Avnet

Avnet, Inc., distributes electronic component technology. The company operates through two segments, Electronic Components and Farnell. The Electronic Components segment markets, sells, and distributes semiconductors; interconnect, passive, and electromechanical components; and other integrated components from electronic component manufacturers. It also offers design chain support that provides engineers with technical design solutions; engineering and technical resources to support product design, bill of materials development, and technical education and training; and supply chain solutions that provide support and logistical services to original equipment manufacturers, electronic manufacturing service providers, and electronic component manufacturers. In addition, this segment provides embedded solutions, such as technical design, integration, and assembly of embedded products, systems, and solutions primarily for industrial applications, as well as embedded display solutions comprising touch and passive displays; and develops and manufactures standard board and industrial subsystems, and application-specific devices that enable it to produce systems tailored to specific customer requirements. This segment serves various markets, such as automotive, medical, defense, aerospace, telecommunications, industrial, and digital editing. The Farnell segment distributes kits, tools, and electronic and industrial automation components, as well as test and measurement products to engineers and entrepreneurs. It has operations in the Americas, Europe, the Middle East, Africa, and Asia. Avnet, Inc. was founded in 1921 and is headquartered in Phoenix, Arizona.

About Celestica

Celestica Inc. provides supply chain solutions in North America, Europe, and Asia. It operates through two segments: Advanced Technology Solutions, and Connectivity & Cloud Solutions. The company offers a range of product manufacturing and related supply chain services, including design and development, new product introduction, engineering services, component sourcing, electronics manufacturing and assembly, testing, complex mechanical assembly, systems integration, precision machining, order fulfillment, logistics, asset management, product licensing, and after-market repair and return services. It also provides hardware platform solutions, which includes development of infrastructure platforms, and hardware and software design solutions and services which is used as-is or customized for specific applications; and management of program including design and supply chain, manufacturing, and after-market support, including IT asset disposition and asset management services. The company offers its products and services to original equipment manufacturers, cloud-based, and other service providers, including hyperscalers, and other companies in aerospace and defense, industrial, HealthTech, capital equipment, and communication and enterprise markets. Celestica Inc. was incorporated in 1994 and is headquartered in Toronto, Canada.