How Did Corning Perform In Q1?

by Trefis Team
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Corning
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Corning (NASDAQ: GLW) reported better-than-expected its Q1 2018 results on Tuesday, beating both revenue and earnings consensus estimates. Revenues in the quarter came in about 5% higher than the year ago period, while earnings fell by about 14%, largely due to higher investments and loss from currency hedging. The better-than-expected results were driven by strong performance in the Optical Communications, Environmental Technologies, and Life Sciences segments, slightly dampened by pressure in the Specialty Materials and Display Technologies segments. The company expects this trend to carry into the second quarter, with a positive outlook for 2018 in most segments, other than Display Technologies – where it expects a soft performance due to sequential LCD price declines. Below, we provide a brief overview of the company’s results and what lies ahead.

 

The company’s stock is now trading at around $27, and we believe it is undervalued in comparison to our price estimate of $31. We have created an interactive dashboard elaborating on our valuation process. Please click on the link to adjust drivers and arrive at your own price estimate.

We are upbeat about Corning’s growth prospects for 2018, driven by strong demand for optical fiber products, thanks to increased consumption of streaming and cloud services. The acquisition of 3M’s communication markets business, which is likely to expand both its global reach and portfolio, should provide significant long term growth opportunities. In addition, Corning expects the demand for its Gorilla Glass to pick up in the second half of 2018 –  driven by new mobile launches, and adoption of its next gen Gorilla Glass. Further, we also expect strong demand for Corning’s gas particulate filters (GPF’s) as auto manufacturers ramp for full adoption of Euro VI regulations this September. In addition, the China 6 emissions implementation in 2020 should provide for long-term growth opportunities in this segment. On the other hand, we expect soft demand for its Display Technologies segment to continue driven by sequential LCD price declines.

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