What To Expect From Corning’s Q2?

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Corning (NYSE: GLW) is scheduled to report its Q2 2022 results on Wednesday, July 27. We expect the company to post revenue and earnings in line with the street expectations. The company should benefit from 5G expansion and cloud computing. However, the Covid induced lockdowns in China may hamper the overall growth. Also, the ongoing semiconductor chip shortage likely weighed on the company’s automotive business. The company undertook pricing actions earlier this year, which should aid the margin expansion in the near term. Although we expect Corning to report an in-line Q2, we find that GLW stock is undervalued at its current levels, as discussed below. Our interactive dashboard analysis of Corning Earnings Preview has additional details.

(1) Revenues expected to be in line with the consensus estimates

  • Trefis estimates Corning’s Q2 2022 revenues to be around $3.8 billion, aligning with the consensus estimate.
  • Corning will likely see a pickup in demand for optical fiber as carriers continue to expand their 5G coverage.
  • The company will likely benefit from higher price realization for its display glass.
  • However, looking at environmental technologies, the sales may decline due to the impact of the semiconductor chip shortage on the automotive industry.
  • Looking back at Q1 2022, Corning’s revenues grew 15% y-o-y to $3.7 billion, led by a 28% growth in optical communications and an 11% rise in display technologies.
  • Our dashboard on Corning’s Revenues offers more details on the company’s segments.
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2) EPS likely to align with the consensus estimates

  • Corning’s Q2 2022 earnings per share (EPS) is expected to be $0.58 per Trefis analysis, broadly aligning with the consensus estimate of $0.57.
  • Corning’s adjusted net income of $465 million in Q1 2022 reflected a 16% rise from its $402 million figure in the prior-year quarter. This can be attributed to higher revenues and a 40 bps improvement in net margins.
  • We expect the margins to improve in Q2 as well, led by pricing actions taken by the company.
  • For the full-year 2022, we expect the adjusted EPS to be higher at $2.36, compared to $2.07 in 2021.

(3) GLE stock looks undervalued

  • We estimate Corning’s Valuation to be around $45 per share, which is over 35% above the current market price of $33.
  • At its current levels, Corning stock is trading at a forward P/E multiple of just 14x based on our EPS estimate of $2.36 for 2022, compared to the last three-year average of 18x, implying that GLW stock has some more room for growth.
  • Furthermore, if the company reports upbeat Q2 results and provides an outlook better than the street estimates, the P/E multiple will likely be revised upward, resulting in higher levels for GLW stock.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Earnings for the full year

While GLW stock looks like it has some more room for growth, it is helpful to see how Corning’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for 3M vs. AGCO.

With inflation rising and the Fed raising interest rates, among other factors, GLW stock has fallen 12% this year. Can it drop more? See how low Corning stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jul 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 GLW Return 4% -12% 35%
 S&P 500 Return 1% -20% 71%
 Trefis Multi-Strategy Portfolio 3% -21% 214%

[1] Month-to-date and year-to-date as of 7/19/2022
[2] Cumulative total returns since the end of 2016

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