Corning Inc.GLW reported third-quarter 2017 adjusted earnings of 43 cents per share, beating the Zacks Consensus Estimate by three cents. Earnings increased 2.4%, year over year and sequentially.
The growth was driven by improvement in revenues. Core revenues increased 6% year over year to $2.70 billion, which comfortably surpassed the Zacks Consensus Estimate of $2.58 billion. Revenues increased 4.2% on a sequential basis.
The results reflect strength in the company's Optical Communications and Specialty Materials business lines.
Corning recently achieved a milestone by selling 1 billionth kilometer of optical fiber. We expect sales to continue to benefit from strong demand for fiber products, as reflected by the Verizon Communications Inc. VZ deal, which was signed in April.
Additionally, strong Gorilla Glass shipment drove Specialty Materials sales. The glass demand is increasing consistently due to increasing adoption by smartphone makers like Apple Inc. AAPL . Moreover, Gorilla Glass shipment to the automotive sector also improved significantly in the reported quarter.
Further, Valor pharmaceutical glass packaging solution, which was jointly developed with Pfizer PFE and Merck, gained significant traction in the quarter.
Corning's shares have returned 23.7% year to date, slightly outperforming the industry 's 21% rally.
The Display Technologies segment generated around 34.4% of total revenue. On an adjusted basis, revenues decreased 8.8% from the year-ago quarter but increased 2.3% sequentially to $860 million.
The LCD glass market and Corning's volumes were up slightly better than expected. The company noted that LCD glass prices declined moderately than the previous quarter.
Optical Communications generated 35.3% of total revenue. Reported segment revenues increased 15.3% year over year and 4% on a sequential basis to $917 million on the back of strong demand for both enterprise and carrier products. The year-over-year growth was much better than management's anticipated increase of 10%.
The Environmental Technologies segment generated around 11.1% of revenues. Reported segment revenues were up 4.9% year over year and 5.3% sequentially to $277 million. The year-over-year growth was driven by strong demand for Corning's solutions in the automotive market and additional contract wins.
Specialty Materials generated 14.9% of revenues. Reported segment revenues surged 26.4% year over year and 10.7% sequentially to $373 million backed by strong shipment of Gorilla Glass.
The Life Sciences business accounted for around 8.9% of revenues. Reported revenues were up 4.2% from the year-ago quarter and 0.9% sequentially to $223 million.
Adjusted gross margin contracted 110 basis points (bps) from the year-ago quarter and 40 bps from the previous quarter to 42%.
Adjusted selling, general & administrative expenses (SG&A), as a percentage of revenues, increased 90 bps from the year-ago quarter but remained almost flat from the previous quarter to 13.8%.
Moreover, research & development expenses (R&D), as a percentage of revenues, increased 70 bps on a year-over-year basis but decreased 10 bps sequentially.
For fourth-quarter 2017, Corning expects LCD glass market and its volume to remain flat sequentially. The company expects sequential LCD glass price declines to be moderate.
Optical Communications sales are anticipated to increase high single digit percentage on a year-over-year basis.
Environmental Technologies sales are expected to increase by low-teens percentage, while Specialty Materials sales are anticipated to increase by low-to-mid teens percentage range. The Life Sciences business will grow mid-single digit percentage from the year-ago quarter.
Corning currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today's Zacks #1 Rank stocks here .
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.