GLW

Here's What To Expect From Corning's Q1

Corning Stock (NYSE: GLW) will report its Q1 2024 results on Tuesday, April 30. We expect the company’s revenues to come in at $3.1 billion and adjusted earnings of $0.35 per share, aligning with the consensus estimates. Corning expects Q1 to be a low quarter, with growth expected in the coming quarters. While we expect the company to post an in-line Q1, we think its stock is appropriately priced. Our interactive dashboard analysis of Corning’s Earnings Preview has 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?

Firstly, let us look at its stock performance in recent years. GLW stock has seen a decline of 15% from levels of $35 in early January 2021 to around $30 now, vs. an increase of about 30% for the S&P 500 over this roughly three-year period. However, the decrease in GLW stock has been far from consistent. Returns for the stock were 3% in 2021, -14% in 2022, and -5% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 — indicating that GLW underperformed the S&P in 2021 and 2023.

In fact, consistently beating the S&P 500 — in good times and bad — has been difficult over recent years for individual stocks; for heavyweights in the Information Technology sector including MSFT, AAPL, and NVDA, and even for the megacap stars GOOG, TSLA, and AMZN. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could GLW face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months — or will it see a recovery? From a valuation perspective, we think Corning is fully priced. We estimate Corning’s valuation to be $32 per share, close to its current price of $31. Our forecast is based on a 17x P/E multiple for GLW and expected earnings of $1.89 on a per-share and adjusted basis for the full-year 2024. The 17x P/E multiple for GLW compares with the stock’s average of 18x over the last five years.

Looking at the previous quarter, Corning’s revenue of $3.3 billion was down 10% y-o-y due to a 24% fall in optical communications sales amid fewer orders from mobile carriers. The company saw its adjusted operating margin expand 230 bps y-o-y to 16.3% in Q4. Lower revenues and margin expansion resulted in earnings of $0.39 on a per-share and adjusted basis, compared to $0.47 per share in the prior year period.

Coming to the latest quarter, the sales are expected to decline 7% y-o-y due to lower optical communication sales. However, 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. Although Q1 is expected to be a muted quarter for Corning, its stock will likely react to the revisions in guidance, if any.

While GLW stock appears to be appropriately priced, 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.

Returns Apr 2024
MTD [1]
2024
YTD [1]
2017-24
Total [2]
 GLW Return -5% 3% 29%
 S&P 500 Return -5% 4% 122%
 Trefis Reinforced Value Portfolio -8% -2% 598%

[1] Returns as of 4/22/2024
[2] Cumulative total returns since the end of 2016

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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.

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