Corning Stock Likely To Trade Sideways Post Q4

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Corning (NYSE: GLW) is scheduled to report its Q4 2022 results on Tuesday, January 31. We expect the company to post revenue and earnings in line with the street expectations. Although the company has benefited from 5G expansion and cloud computing in recent quarters, it expects a sequential decline in optical communication segment sales in Q4, primarily due to the timing of specific projects. Furthermore, we believe GLW stock has little 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 Q4 2022 revenues to be around $3.50 billion, reflecting a mid-single-digit y-o-y decline and broadly aligning with the consensus estimate of $3.55 billion.
  • Corning should continue to benefit from a pickup in optical fiber demand as carriers expand their 5G coverage. However, due to the timing of specific projects in North America, it may see a sequential decline in segment sales.
  • The company also expects a sequential decline in the Specialty Materials segment due to lower demand in the smartphone, notebook, and tablet markets.
  • On the positive side, the company will likely benefit from sustained higher price realization for its display glass.
  • Looking back at Q3 2022, Corning’s revenues declined 4% y-o-y to $3.5 billion, primarily due to a 22% fall in Display Technologies segment sales.
  • 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 Q4 2022 earnings per share (EPS) is expected to be $0.45 per Trefis analysis, aligning with the $0.44 consensus estimate but lower than the $0.54 figure seen in the prior year quarter.
  • Corning’s adjusted net income of $438 million in Q3 2022 reflected a 10% fall from its $485 million figure in the prior-year quarter. This can be attributed to lower revenues and a 120 bps operating margin contraction.
  • For the full-year 2023, we expect the adjusted EPS to be higher at $2.28, compared to $2.07 in 2021 and an estimated $2.07 in 2022.

(3) GLW stock has little room for growth

  • We estimate Corning’s Valuation to be around $38 per share, which is 6% above the current market price of $36.
  • At its current levels, Corning stock is trading at a forward P/E multiple of 16x based on our EPS estimate of $2.28 for 2023, compared to the last three-year average of 18x, implying that GLW stock has little room for growth.
  • However, if the company reports upbeat Q4 results and provides a 2023 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 little 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.

Despite higher inflation and the Fed raising interest rates, GLW stock has risen 1% in the last twelve months. But can it drop from here? 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 Jan 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 GLW Return 12% 12% 48%
 S&P 500 Return 5% 5% 79%
 Trefis Multi-Strategy Portfolio 9% 9% 242%

[1] Month-to-date and year-to-date as of 1/25/2023
[2] Cumulative total returns since the end of 2016

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