More Growth From Corning After Q3?

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Corning

Corning (NYSE: GLW) is scheduled to report its Q3 2022 results on Tuesday, October 25. We expect the company to post revenue and earnings slightly above the street expectations. The company should continue to benefit from 5G expansion and cloud computing. Better price realization should aid the overall performance. We expect the company to navigate well in Q3 and its stock to rise in the near term. Furthermore, we believe that GLW stock has ample room for growth, 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 Q3 2022 revenues to be around $3.7 billion, reflecting a low single-digit y-o-y rise and 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.
  • Looking back at Q2 2022, Corning’s revenues declined 2% y-o-y to $3.6 billion, as a 10% growth in optical communication was more than offset by a 13% decline in environmental technologies and an 8% cut in display technologies sales.
  • Our dashboard on Corning’s Revenues offers more details on the company’s segments.
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2) EPS likely to be slightly above the consensus estimates

  • Corning’s Q3 2022 earnings per share (EPS) is expected to be $0.55 per Trefis analysis, slightly above the consensus estimate of $0.52 but lower than the $0.56 figure seen in the prior year quarter.
  • Corning’s adjusted net income of $489 million in Q2 2022 reflected a 5% rise from its $465 million figure in the prior-year quarter. This can be attributed to higher revenues and an 88 bps improvement in net margins.
  • We expect the margins to improve in Q3 as well, led by pricing actions taken by the company.
  • For the full-year 2022, we expect the adjusted EPS to be higher at $2.21, compared to $2.07 in 2021.

(3) GLW stock has room for growth

  • We estimate Corning’s Valuation to be around $42 per share, which is 34% above the current market price of $31.
  • At its current levels, Corning stock is trading at a forward P/E multiple of just 14x based on our EPS estimate of $2.21 for 2022, compared to the last three-year average of 18x, implying that GLW stock has ample room for growth.
  • Furthermore, if the company reports upbeat Q3 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 at 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 16% 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 Oct 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 GLW Return 8% -16% 29%
 S&P 500 Return 3% -23% 64%
 Trefis Multi-Strategy Portfolio 2% -25% 196%

[1] Month-to-date and year-to-date as of 10/18/2022
[2] Cumulative total returns since the end of 2016

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