Corning (GLW) Last Update 12/1/24
Related: CAT BA LMT GE
% of Stock Price
Revenue
Gross Profits
Free Cash Flow
Corning
$49.62
Yours
Trefis Price
N/A
$48.61
Market
 
Top Drivers for Period
Key Drivers
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TREFIS Analysis


Trefis Report
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RECENT NEWS AND ANALYSIS

Potential upside & downside to trefis price

Corning Company

VALUATION HIGHLIGHTS

  1. Optical Communications constitute 47% of the Trefis price estimate for Corning's stock.
  2. Environmental Technologies constitute 18% of the Trefis price estimate for Corning's stock.
  3. Specialty Materials constitute 15% of the Trefis price estimate for Corning's stock.

WHAT HAS CHANGED?

  1. GLW Stock Performance
GLW stock has shown strong gains of 65% from levels of $30 in early January 2021 to around $50 in late November 2024, vs. an increase of about 60% for the S&P 500 over this period.

However, the increase in GLW stock has been far from consistent. Returns for the stock were 6% in 2021, -12% in 2022, and -1% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 - indicating that GLW underperformed the S&P in 2021 and 2023.

  1. Q3 2024 Earnings
Corning posted mixed results in Q3 2024. The company reported core sales of $3.7 billion (up 8% y-o-y). While display technologies sales were up 4%, optical communications sales surged 36%. Looking at the bottom line, the company's adjusted EPS stood at $0.54, compared to $0.45 in the prior-year quarter.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Corning's divisions that present opportunities for upside or downside to the current Trefis price estimate for Corning:

  • Corning's Display Technology Revenues: Corning's Display Technologies revenues have fluctuated in recent years due to competitive pressure as well as the impact of acquisitions and divestitures. The figure stood at $5.0 billion in 2023. Looking forward, we expect the figure to increase gradually to over $7.5 billion by the end of our review period in 2031.

    If, however, Corning's display technology revenues were to cross $12 billion due to potential manufacturing cost advantage in a period of declining prices, better uptake of its display panels, and solid growth from a newer generation of glass, it could lead to a potential upside of 10% to our price estimate.

  • The company's three smaller segments have all been growing faster than the underlying industries on account of a myriad of reasons:

    - Environmental Technologies' growth was driven by the adoption of Corning's proprietary gasoline particulate filter (GPF) innovation.

    - Specialty Materials growth is being led by the adoption of industry-leading cover glass innovation.

    - Life Sciences business is benefiting from a strengthening market on account of newer applications, especially in growth categories like cell culture and gene therapy.

    BUSINESS SUMMARY

    Corning is a global technology company that manufactures and processes a variety of products at approximately 119 plants in 15 countries. It makes money primarily through its joint ventures, Samsung Corning and Dow Corning. Samsung Corning manufactures glass substrates for displays which are primarily used in notebook computers, flat-panel desktop monitors, and televisions. Dow Corning manufactures silicone products. Corning's other business segments include environmental technologies, life sciences, and telecommunications.

    KEY TRENDS

    Display glass prices

    Glass manufacturing is a commoditized business where prices are determined solely by factors of supply and demand. Innovations in display glass technology and manufacturing overcapacity have put downward pressure on prices. However, the pricing environment has improved lately.

    Growth in consumer demand for television in emerging markets

    Notebook, tablet PC, and television penetration remain low in most emerging markets and developing nations. We expect this demand to increase and drive the growth in global glass shipments.

    Demand for large-sized displays

    Consumers prefer larger displays on their TVs, notebooks, tablets, and mobile phones because of the enhanced viewing pleasure. This may drive an increase in demand for television glass and thereby increase shipments. The demand for large-screen televisions is also likely to be driven by new technologies such as Ultra HD, 4K, and 8K, which provide enhanced viewing pleasure on large screen sizes.

    High replacement rate for television in developed markets

    The replacement rate for tablets, notebook PCs, and televisions remains high in developed markets. This is expected to create demand for new panels and hence increase the total number of shipments.

    Investment in new technologies for maintaining competitive advantage

    Corning believes it has sustained its competitive advantages in glass substrate products by investing in new technologies. This is likely to continue and could keep costs high.

    Stringent emission standards drive demand for better filters

    To ensure compliance with emission standards, automobile manufacturers resort to the use of emission control systems. As these standards get even stricter, automobile manufacturers have to upgrade to newer and more effective emission control systems in order to remain compliant. This has a positive impact on the automotive exhaust systems market, which includes manufacturers of automotive substrates and filters, such as Corning.