Corning Incorporated (GLW) engages in display technologies, optical communications, environmental technologies, specialty materials, and life sciences businesses worldwide. The company operates through five segments: Display Technologies, Optical Communications, Specialty Materials, Environmental Technologies, and Life Sciences.
GLW is one of the world’s leading innovators of material science. The company is involved in the invention of many cutting-edge technologies. It is engaged in producing glass, ceramics, and optical fiber. The company’s products include gorilla scratch-resistant glass, gasoline particulate filters, optical fiber, and flat-panel displays.
GLW is expected to benefit from the rising adoption of 5G worldwide as it supplies optical fiber products to various telecom companies. The company has a strong foothold in the lucrative semiconductor industry through its majority stake in Hemlock Semiconductor. Hemlock Semiconductor manufactures polysilicon for semiconductors and solar wafers.
The company produces gorilla glass panels for mobile phones which enable millimeter-wave reception. Also, as the world moves towards a cleaner future, the company’s gasoline particulate filters should enable automobile OEM’s fulfill emission standards.
The company is well known for its economies of scale. Moreover, its growing spending on R&D should provide it an edge over its competitors.
GLW’s four-year average dividend yield is 2.57%, and its forward annual dividend of $1.08 translates to a 3.43% yield. The company has increased its dividend for 11 consecutive years. Its dividend has grown at a 10.31% CAGR over the past three years.
The stock has lost 15.3% in price year-to-date and 22.9% over the past year to close the last trading session at $31.51. It is currently trading 27.5% below its 52-week high of $43.47, which it hit on February 10, 2022.
Here's what could influence GLW’s performance in the upcoming months:
Robust Financials
GLW’s net sales increased 11.8% year-over-year to $3.68 billion for the first quarter ended March 31, 2022. The company’s operating income increased 13.5% year-over-year to $570 million. Also, its EPS came in at $0.68, representing an increase of 1.5% year-over-year. In addition, its net income increased 19% sequentially to $581 million.
Favorable Analyst Estimates
Analysts expect GLW’s revenue for fiscal 2022 and 2023 to increase 8.8% and 4.8% year-over-year to $15.37 billion and $16.11 billion, respectively. Its EPS for fiscal 2022 and 2023 is expected to grow 13% and 12% year-over-year to $2.34 and $2.64, respectively. It surpassed Street EPS estimates in three of the trailing four quarters.
Discounted Valuation
In terms of forward EV/EBITDA, GLW’s 7.60x is 35% lower than the 11.71x industry average. Its forward P/S of 1.73x is 35.5% lower than the 2.68x industry average. Also, the stock's 2.16x forward EV/S is 20.5% lower than the 2.72x industry average.
High Profitability
In terms of trailing-12-month net income margin, GLW’s 13.05% is 152.2% higher than the 5.17% industry average. Likewise, its 11.96% trailing-12-month Capex/S is 406.2% higher than the industry average of 2.36%. In addition, its 15.31% trailing-12-month levered FCF margin is 64.7% higher than the 9.30% industry average.
POWR Ratings Show Promise
GLW has an overall rating of B, equating to a Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. GLW has a B grade for Quality, in sync with its 16.29% trailing-12-month EBIT margin, which is 102% higher than the industry average of 8.06%.
It has a B grade for Growth, in sync with favorable analyst estimates and its robust financials.
GLW is ranked #10 out of 36 stocks in the A-rated Industrial – Manufacturing industry. Click here to access GLW’s ratings for Value, Momentum, Stability, and Sentiment.
Bottom Line
GLW’s products, such as optical fiber, gorilla glass panels, gasoline particulate filters, and semiconductors, are already in high demand. Still, their market is expected to grow further due to their effectiveness in future technologies.
Given the company’s strong financials, favorable analyst estimates, higher-than-industry profitability, and discounted valuation, it could be wise to invest in the stock for the long haul.
How Does Corning Incorporated (GLW) Stack Up Against its Peers?
GLW has an overall POWR Rating of B, equating to a Buy rating. You might want to consider investing in the following Industrial – Manufacturing stocks with an A (Strong Buy) and B (Buy) rating: Vishay Precision Group, Inc. (VPG), Core Molding Technologies, Inc. (CMT), and Tredegar Corporation (TG).
GLW shares were trading at $31.28 per share on Friday afternoon, down $0.23 (-0.73%). Year-to-date, GLW has declined -14.76%, versus a -20.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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