Up 9% In A Month, Will Corning Stock See Higher Levels?

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Corning stock (NYSE: GLW) is up 9% in a month, led by a recovery in broader markers, with the S&P500 index rising 5%. Corning reported its Q3 results in late October, with revenue and earnings falling below our estimates. Corning’s revenue of $3.5 billion reflected a 4% y-o-y decline and fell short of our forecast of $3.7 billion. The company benefited from continued 5G expansion, and its optical communications business saw a 16% y-o-y rise in sales. Improvements in the China market aided its environment technologies business, up 10%. Life sciences revenue also grew by 2%. However, these gains were more than offset by a significant 28% fall in display technologies revenue due to a decline in panel utilization and a 7% fall in specialty materials business, owing to lower volume for mobiles and notebooks. Corning’s earnings of $0.51 on a per share and adjusted basis was down 9% y-o-y, partly due to a 120 bps fall in operating margin.

Given the weakness in display panel business and forex headwinds, among other factors, Corning guided for Q4 2022 sales to be in the range of $3.45 and $3.65 billion, and its adjusted earnings per share to fall between $0.41 and $0.47. This is far below our prior estimate of $0.59 for Q4 2022.

Despite the weak outlook for Q4, we find Corning stock attractive at current levels. We now estimate Corning’s Valuation to be around $38 per share, which is about 27% above the current market price of $30. This represents an 18x P/E multiple based on our revised expected EPS of $2.07 in 2022, aligning with the last three-year average of 18x.

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But What About The Near Term?

Now that GLW stock has seen a 9% rise in a month, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a slightly higher chance of an increase in GLW stock over the next month. GLW stock has seen a move of 9% or more 334 times in the last ten years. 188 of those resulted in GLW stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 188 out of 334, or a 56% chance of a rise in GLW stock over the coming month. See our analysis on Corning Stock Chance of Rise for more details.

Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using the last ten years’ data

  • After moving 2.8% or more over five days, the stock rose on 60% of the occasions in the next five days.
  • After moving 2.3% or more over ten days, the stock rose in the next ten days on 53% of the occasions
  • After moving 8.6% or more over a twenty-one-day period, the stock rose on 56% of the occasions in the next twenty-one days.

This pattern suggests a higher chance of a rise in GLW stock over the next five, ten, and twenty-one days.

 

Corning (GLW) Stock Return (Recent) Comparison With Peers And S&P500

  • Five-Day Return: BDC highest at 9.9%; COMM lowest at -28.2%
  • Ten-Day Return: BDC highest at 17.1%; COMM lowest at -23.1%
  • Twenty-One Days Return: BDC highest at 20.4%; CASA lowest at -19.3%

While GLW stock looks like it has 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 11% 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 Nov 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 GLW Return 3% -11% 36%
 S&P 500 Return -2% -20% 70%
 Trefis Multi-Strategy Portfolio -3% -25% 197%

[1] Month-to-date and year-to-date as of 11/8/2022
[2] Cumulative total returns since the end of 2016

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