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What's in Store for Corning (GLW) This Earnings Season?

Corning Inc.GLW is set to report fourth-quarter fiscal 2015 results on Jan 26, before market opens. Last quarter, the company posted in-line results.

Let's see how things are shaping up for this announcement.

Factors to Consider

Corning's third-quarter earnings matched the Zacks Consensus Estimate but revenues missed the same. Revenues also dropped 3% sequentially and 10.6% year over year.

The Optical segment was the high point of the quarter, although growth rates went down. Overall, results across segments were negatively impacted by currency and a weakening in the global economy, particularly China. This could continue to have a negative impact on fourth-quarter results.

Also, gross margin was down 264 basis points sequentially due to unfavorable mix. This could also affect the margins in the fourth quarter.

However, Corning has hedge contracts in place that should boost results in the to-be-reported quarter.

For the fourth quarter, Corning expects glass volumes to decline slightly with price declines moderating further. Optical Communications sales are expected to grow at a low-to-mid single-digit percentage rate year over year, Specialty Materials to decline at a low-teens percentage rate and both Environmental and Life Sciences to decline at a mid-single-digit percentage rate.

Earnings Whispers

Our proven model does not conclusively show that Corning will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 32 cents. Hence, the difference is 0.00%.

Zacks Rank: Corning's Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

You could consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:

Spirit AeroSystems Holdings, Inc. SPR , with an Earnings ESP of +1.03% and a Zacks Rank #1.

Gilead Sciences Inc. GILD , with an Earnings ESP of +5.86% and a Zacks Rank #1.

Ethan Allen Interiors Inc. ETH , with an Earnings ESP of +9.30% and a Zacks Rank #2.

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SPIRIT AEROSYS (SPR): Free Stock Analysis Report

CORNING INC (GLW): Free Stock Analysis Report

GILEAD SCIENCES (GILD): Free Stock Analysis Report

ETHAN ALLEN INT (ETH): Free Stock Analysis Report

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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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