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Corning (GLW) Beats on Q3 Earnings on Strong Revenues
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Corning Inc. (GLW - Free Report) reported third-quarter 2016 adjusted earnings of 42 cents, which beat the Zacks Consensus Estimate by 4 cents (10.5%). Earnings improved 5% on a year-over-year basis and 10.5% sequentially in the reported quarter.
Reported earnings were 26 cents compared with 15 cents reported in the year-ago quarter and $1.87 reported in the previous quarter.
The year-over-year growth was driven by an improvement in revenues. Adjusted revenues increased 4% year over year to $2.55 billion, which comfortably surpassed the Zacks Consensus Estimate of $2.50 billion. On a sequential basis, revenues increased 4.4%.
Reported revenues surged 10.3% from the year-ago quarter and 7.9% quarter over quarter to $2.51 billion.
Segment Details
The Display Technologies segment generated around 36% of the total revenue. Reported segment revenues were up 19.2% year over year and 12.6% sequentially. On an adjusted basis, revenues inched up 0.7% from the year-ago quarter and 7.2% sequentially to $943 million.
Glass market volume increased in the high-single-digit percentage range (better than the guidance) sequentially driven by increased demand from panel makers. LCD glass volume was slightly more than the market due to a favorable customer mix, while price declines remained moderate.
Optical Communications generated almost 31.7% of the total revenue. Reported segment revenues grew 6.4% year over year and 1.7% sequentially to $795 million driven by strong demand for fiber-to-the-home market solutions. Revenues from Hyper-scale data-center product sales were below management’s anticipation.
The Environmental Technologies segment generated around 10.4% of revenues. Reported segment revenues were up 2.7% year over year and 1.9% sequentially to $264 million. Strength in Corning’s automotive light-duty substrates were driven by solid demand in North America, Europe and China.
Specialty Materials generated 11.8% of revenues. Reported segment revenues rose 2.4% year over year and 10.9% sequentially to $295 million. Launch of two new Gorilla Glass products in the quarter drove sequential revenue growth.
The Life Sciences business accounted for around 8.5% of revenues. Reported revenues were up 1.4% from the year-ago quarter and 1.4% sequentially.
Operating Details
Adjusted gross margin expanded 130 basis points (bps) from the year-ago quarter and 10 bps from the previous quarter to 43.1%.
Adjusted selling, general & administrative expense (SG&A) increased 30 bps year over year and declined 730 bps on a sequential basis.
Moreover, reported research & development expense (R&D) declined 50 bps year over year and 80 bps sequentially.
As a result, reported operating margin expanded 410 bps year over year and 640 bps sequentially to 21.3%.
Management provided its guidance for the fourth quarter.
Corning expects glass volume to be consistent to slightly down, in line with the glass market. The company expects panel maker utilization to remain high and glass supply to remain tight in the fourth quarter.
Optical Communications sales are expected to increase by a high-single-digit percentage driven by continued fiber-to-the-home strength.
Environmental Technologies sales will decline year over year in the low-single digit percentage due to continued weakness in the heavy-duty truck markets.
Specialty Materials sales are anticipated to increase in the high-single-digit percentage range on a year-over-year basis driven by volume growth in Gorilla Glass.
The Life Sciences business will grow low-single digits from the year-ago quarter.
Zacks Rank & Stocks to Consider
Corning carries a Zacks Rank #4 (Sell). Better-ranked stocks in the broader technology sector are Acacia Communications , Veeco Instruments (VECO - Free Report) and Vocera Communications . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vocera, Veeco and Acacia are scheduled to report earnings on Oct 27, Nov 1 and Nov 10, respectively.
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Corning (GLW) Beats on Q3 Earnings on Strong Revenues
Corning Inc. (GLW - Free Report) reported third-quarter 2016 adjusted earnings of 42 cents, which beat the Zacks Consensus Estimate by 4 cents (10.5%). Earnings improved 5% on a year-over-year basis and 10.5% sequentially in the reported quarter.
Reported earnings were 26 cents compared with 15 cents reported in the year-ago quarter and $1.87 reported in the previous quarter.
The year-over-year growth was driven by an improvement in revenues. Adjusted revenues increased 4% year over year to $2.55 billion, which comfortably surpassed the Zacks Consensus Estimate of $2.50 billion. On a sequential basis, revenues increased 4.4%.
Reported revenues surged 10.3% from the year-ago quarter and 7.9% quarter over quarter to $2.51 billion.
Segment Details
The Display Technologies segment generated around 36% of the total revenue. Reported segment revenues were up 19.2% year over year and 12.6% sequentially. On an adjusted basis, revenues inched up 0.7% from the year-ago quarter and 7.2% sequentially to $943 million.
Glass market volume increased in the high-single-digit percentage range (better than the guidance) sequentially driven by increased demand from panel makers. LCD glass volume was slightly more than the market due to a favorable customer mix, while price declines remained moderate.
Optical Communications generated almost 31.7% of the total revenue. Reported segment revenues grew 6.4% year over year and 1.7% sequentially to $795 million driven by strong demand for fiber-to-the-home market solutions. Revenues from Hyper-scale data-center product sales were below management’s anticipation.
The Environmental Technologies segment generated around 10.4% of revenues. Reported segment revenues were up 2.7% year over year and 1.9% sequentially to $264 million. Strength in Corning’s automotive light-duty substrates were driven by solid demand in North America, Europe and China.
Specialty Materials generated 11.8% of revenues. Reported segment revenues rose 2.4% year over year and 10.9% sequentially to $295 million. Launch of two new Gorilla Glass products in the quarter drove sequential revenue growth.
The Life Sciences business accounted for around 8.5% of revenues. Reported revenues were up 1.4% from the year-ago quarter and 1.4% sequentially.
Operating Details
Adjusted gross margin expanded 130 basis points (bps) from the year-ago quarter and 10 bps from the previous quarter to 43.1%.
Adjusted selling, general & administrative expense (SG&A) increased 30 bps year over year and declined 730 bps on a sequential basis.
Moreover, reported research & development expense (R&D) declined 50 bps year over year and 80 bps sequentially.
As a result, reported operating margin expanded 410 bps year over year and 640 bps sequentially to 21.3%.
CORNING INC Price, Consensus and EPS Surprise
CORNING INC Price, Consensus and EPS Surprise | CORNING INC Quote
Guidance
Management provided its guidance for the fourth quarter.
Corning expects glass volume to be consistent to slightly down, in line with the glass market. The company expects panel maker utilization to remain high and glass supply to remain tight in the fourth quarter.
Optical Communications sales are expected to increase by a high-single-digit percentage driven by continued fiber-to-the-home strength.
Environmental Technologies sales will decline year over year in the low-single digit percentage due to continued weakness in the heavy-duty truck markets.
Specialty Materials sales are anticipated to increase in the high-single-digit percentage range on a year-over-year basis driven by volume growth in Gorilla Glass.
The Life Sciences business will grow low-single digits from the year-ago quarter.
Zacks Rank & Stocks to Consider
Corning carries a Zacks Rank #4 (Sell). Better-ranked stocks in the broader technology sector are Acacia Communications , Veeco Instruments (VECO - Free Report) and Vocera Communications . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vocera, Veeco and Acacia are scheduled to report earnings on Oct 27, Nov 1 and Nov 10, respectively.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>