Pricing Actions To Aid Corning’s Q2?

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Corning Stock (NYSE: GLW) will report its Q2 2023 results on Tuesday, July 25. We expect the company’s revenues to come in at $3.6 billion, slightly ahead of the consensus estimate of $3.5 billion. This would mark a year-over-year decline of about 1%. Earnings will likely come in at about $0.48 per share, marginally beating the consensus estimate of $0.46. See our interactive dashboard analysis on  Corning’s Earnings Preview for more details on how the company’s revenues and earnings will likely trend for the quarter. So, what are some of the trends that are likely to drive Corning’s results?

Corning should benefit from higher panel maker utilization and pricing actions. The top-line will likely be bolstered by increased adoption of gasoline particulate filters. Looking at Q1’23, Corning’s revenues of $3.2 billion reflected a 7% y-o-y decline, with lower sales for most of its segments. However, pricing actions helped the company expand its margin profile, with core gross margin expanding by 160 bps and core operating margin up by 150 bps during the quarter. On a reported basis operating margin was lower due to the impact of currency headwinds. Our Corning Operating Income Comparison dashboard has more details. Looking at the bottom line, Corning reported earnings of $0.41 per share in Q1’23, compared to $0.47 per share in the prior-year quarter. Corning should continue to benefit from pricing actions and improvement in the demand outlook for some of its segments, including display technologies.

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Although we expect Corning to post an upbeat Q2’23, we believe its stock has little room for growth. We estimate Corning’s valuation to be $37 per share, about 9% above its current price of $34. Our forecast is based on an 18x P/E multiple for GLW and expected earnings of $2.06 on a per-share and adjusted basis for the full-year 2023. The 18x P/E multiple aligns with the stock’s last four-year average, implying that GLW stock has little room for growth from its current levels. That said, if the company were to report a Q2 beat and upward revision in guidance, it would likely see its stock rise post the results announcement.

While GLW stock appears to have 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 Oracle vs. Corning.

With inflation easing after the Fed raising interest rates, GLW stock has seen a rise of 5% this year. 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 portfolio that aims for long-term growth? Here’s a value portfolio that’s done much better than the market since 2016.

Returns Jul 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 GLW Return -4% 5% 38%
 S&P 500 Return 2% 18% 102%
 Trefis Multi-Strategy Portfolio 6% 25% 303%

[1] Month-to-date and year-to-date as of 7/18/2023
[2] Cumulative total returns since the end of 2016

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