Quality, Growth, and Microcap Investor. Long/Short GARP Investment Fund, email: [email protected] Shorts & Squeeze Corner: https://shortscorner.substack
Joined June 2013
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Deep Sail Capital - Q3 2026 Investor Letter is now available on our website. The letter includes our long thesis on Innovative Aerosystems ($IA)
Link: deepsailcapital.com/investor…
Deep Sail Capital retweeted
CELESTICA $CLS Q3’26 EARNINGS HIGHLIGHTS
🔹 Revenue: $5.83B (Est. $5.46B) 🟢; vs $3.19B LY
🔹 Adj. EPS: $3.30 (Est. $2.97) 🟢; vs $1.58 LY
🔹 Adj. Operating Margin: 8.5%; vs 7.6% LY
🔹 Adj. Oper Earnings: $496.1M (Est. $459M) 🟢
FY26 Guide:
🔹 Revenue: $21.00B (Est. $20.61B) 🟢; from $20.5B
🔹 Adj. EPS: $11.55 (Est. $11.18) 🟢; from $11.30
🔹 Adj. Operating Margin: 8.4%; unchanged
🔹 Free Cash Flow: $460M; from $600M
FY27 Guide:
🔹 Revenue: $40.00B (Est. $35.7B) 🟢
🔹 Adj. EPS: $21.50 (Est. $19.66) 🟢
🔹 Adj. Operating Margin: 9.0%
🔹 Capital Expenditures: $1.5B-$2.0B
Q4 Guide:
🔹 Revenue: $6.28B-$6.58B (Est. $6.39B) 🟡
🔹 Adj. EPS: $3.37-$3.57 (Est. $3.50) 🟡
🔹 Adj. Operating Margin: 8.7% at midpoint
Cash Flow:
🔹 Free Cash Flow: $127.5M; vs $88.9M LY
🔹 PP&E Purchases: $262.2M; vs $37.3M LY
Segment Revenue (YoY):
🔹 CCS: $4.87B; +102%
🔹 ATS: $960M; +23%
🔹 HPS Revenue: ~$2.3B; +70%
Segment Margin:
🔹 CCS Margin: 8.9%; vs 8.3% LY
🔹 ATS Margin: 6.6%; vs 5.5% LY
Other Q3 Metrics:
🔹 GAAP EPS: $3.26; vs $2.31 LY
🔹 Adj. ROIC: 64.7%; vs 37.5% LY
Key Updates:
🔹 Total Return Swap Impact on GAAP EPS: -$0.03/share negative (pre-tax)
🔹 SBC, Amortization & Restructuring Charge on GAAP EPS: $0.26/share (pre-tax)
🔹 Public Offering: $3.45B aggregate gross proceeds
Comments:
🔸 “We are also pleased to provide our initial 2027 annual outlook, with revenue of $40.0 billion, up 90%, record adjusted operating margin (non-GAAP)* of 9.0% and adjusted EPS (non-GAAP)* of $21.50.”
🔸 “The demand environment continues to be very robust, supporting our 2027 revenue outlook, with customer demand forecasts meaningfully higher for 2028.”
$MELI this morning was a gift to long term investors.
Take them when you get them. Be ready.
$DLO was also hit hard (which shouldn’t really have been because of the diversified model) and I started a position today.
I think Elon is right about Neoclouds not all making it but it doesn’t mean they all go to zero. There assets will get bought, companies will merge, some may go into bankruptcy and restructure their debt, some may get bought out by hyperscalers looking for more compute.
Another thing we need to talk about more in Neoclouds is they are not all the same type of business, there are GPU operators that own/operate GPUs and their are landlords that own/operate the site and power.
They each have different risks and business models, landlords likely in a better position to survive/ get bought out by PE, and GPU operators will be hyperscalers targets.
$CRDO - Others have tried this already.
$MRVL and $BDCM have offered merchant AEC DSPs for years. A cheaper merchant DSP hasn’t broken the integrated model so far.
Credo’s moat is the system not just the DSP. Credo owns qualification, SerDes, AEC patents, ETC which allow it to keep the full cable end to end. It has deep relationships with five hyperscalers and growing engagement with neoclouds.
Anyone that knows the market knows $MXL might try to get a piece of the market but unlikely to get a material piece.
I added more $CRDO today after shares dropped ~10% on $MXL targeting ~25% of 1.6T AEC market despite not expecting its first revenue until 2027.
I think the market is overlooking how quickly AEC demand is growing because with market already expanding ~3x in a year and content per solution more than doubling at 1.6T that means Credo could lose some share and still deliver massive growth.
Everyone seems to be waiting for a signal to buy.
Next two weeks could clear a lot of market uncertainty:
10/28: Fed + MSFT/GOOGL earnings
10/29: PCE + AMZN earnings
11/3: Midterms
11/6: Jobs
