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Corning Authorizes $2B Share Buyback Ahead of Q2 Earnings - Analyst Blog

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Corning Inc.GLW recently authorized $2 billion to buy back shares through the end of 2016.

Corning believes that its value is greater than what is reflected by the share price, and therefore approved the buyback.

Along with this, the company declared a quarterly dividend of 12 cents per share payable on Sep 30, 2015, to shareholders of record as on Aug 31.

The authorization is in addition to the company's current share buyback program, also set to expire at the end of 2016.

Since Oct 2011, Corning has authorized five share repurchase programs worth a total of $9 billion.

First-Quarter Results

The company is set to release the second-quarter earnings results on Jul 28.

Corning ended the first quarter with $5.07 billion in cash and short-term investments, down $1.00 billion during the quarter.

The company, however, has a huge debt balance. Including long-term liabilities and short-term debt, the net debt position was $1.10 billion at the end of the quarter, increasing significantly from $55 million at the beginning of the quarter.

Cash generated from operations was $601 million, of which $333 million was spent on capex, $531 million on acquisitions, $477 million for share repurchases and $177 million was paid as dividends.

Looking Ahead

Corning's first-quarter earnings came ahead of expectations, sending shares up. All the major segments exceeded expectations which along with the CPM integration yielded the desired results.

Nevertheless, currency remains a major headwind because of the strengthening dollar versus the yen. However, Corning has hedge contracts in place that are expected to offset the headwinds to some extent. Management stated that 100% of 2015 earnings, 80% of 2016 earnings and 70% of 2017 earnings have been hedged under the new program.

Corning is also returning cash to investors through share repurchases as well as dividends. The company raised the dividend by 20% last December and authorized a share repurchase program worth $1.5 billion.

Corning currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the industry are Autobytel Inc. ABTL , PetMed Express, Inc. PETS and Expedia Inc. EXPE . All the stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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