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Why Is Corning (GLW) Down 11% Since Last Earnings Report?
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It has been about a month since the last earnings report for Corning (GLW - Free Report) . Shares have lost about 11% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Corning due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Corning Q2 Earnings & Revenues Beat Estimates, Up Y/Y
Corning reported solid second-quarter 2019 results driven by its technology and manufacturing leadership, and investments across multiple businesses.
Net Income
On a GAAP basis, net income for the June quarter declined to $92 million or 9 cents per share from $738 million or 78 cents per share in the year-ago quarter, primarily due to non-cash, mark-to-market losses associated with the company’s currency-hedging contracts.
Core earnings came in at $410 million or 45 cents per share compared with $359 million or 38 cents per share in the year-earlier quarter, reflecting year-over-year sales and earnings growth across all businesses. The bottom line beat the Zacks Consensus Estimate by a penny.
Revenues
Quarterly GAAP net sales were up 7% year over year to $2,940 million driven by growth in every business segment. Core sales increased 8.2% to $2,986 million, surpassing the consensus estimate of $2,975 million.
Segment Results
Net sales from Display Technologies segment were $848 million compared with $780 million, as the company’s glass volume grew significantly faster due to the ramp of Corning’s Gen 10.5 manufacturing capacity, and better-than-expected glass pricing environment. The segment’s net income was $213 million compared with $192 million in the prior-year quarter.
Net sales from Optical Communications segment increased 6.5% year over year to $1,090 million, driven by hyperscale data center and optical fiber demand as well as sales from the 3M Communication Markets Division acquisition. The segment’s net income was $158 million compared with $150 million in the prior-year quarter.
Environmental Technologies segment’s net sales increased 15.5% to $366 million, driven by the accelerated adoption of gas particulate filters and strong growth in heavy-duty diesel. The segment’s net income was $65 million compared with $54 million in the prior-year quarter.
The Specialty Materials segment’s net sales were up 7.6% to $369 million, led by strong demand for the company’s portfolio of mobile consumer electronics glass solutions. The segment’s net income was $67 million compared with $64 million in the prior-year quarter.
Net sales from Life Sciences segment were up 6.1% to $260 million. The segment’s net income was $40 million compared with $31 million in the prior-year quarter, owing to higher sales volume and manufacturing performance optimization.
Other Details
Cost of sales increased 11.9% year over year to $1,875 million. Gross profit decreased to $1,065 million from $1,072 million. Core gross profit was $1,198 million compared with $1,123 million in the prior-year quarter.
Cash Flow & Liquidity
During the first six months of 2019, Corning generated $124 million of net cash from operating activities compared with $1,035 million in the year-ago period. As of Jun 30, 2019, the specialty glass maker had $1,178 million in cash and equivalents with $6,080 million of long-term debt.
Going Forward
Despite macro-economic headwinds, Corning continues to outpace the market it serves, which underscores the resilience of its portfolio. The company is extending strong performance under its new 2020-2023 Strategy & Growth Framework. It is focusing on its portfolio and utilizing financial strength to enhance shareholder returns. The company’s capabilities are becoming increasingly vital to diverse industries, and multiple opportunities support leadership across all of its market-access platforms.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -9.8% due to these changes.
VGM Scores
Currently, Corning has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Corning has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Corning (GLW) Down 11% Since Last Earnings Report?
It has been about a month since the last earnings report for Corning (GLW - Free Report) . Shares have lost about 11% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Corning due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Corning Q2 Earnings & Revenues Beat Estimates, Up Y/Y
Corning reported solid second-quarter 2019 results driven by its technology and manufacturing leadership, and investments across multiple businesses.
Net Income
On a GAAP basis, net income for the June quarter declined to $92 million or 9 cents per share from $738 million or 78 cents per share in the year-ago quarter, primarily due to non-cash, mark-to-market losses associated with the company’s currency-hedging contracts.
Core earnings came in at $410 million or 45 cents per share compared with $359 million or 38 cents per share in the year-earlier quarter, reflecting year-over-year sales and earnings growth across all businesses. The bottom line beat the Zacks Consensus Estimate by a penny.
Revenues
Quarterly GAAP net sales were up 7% year over year to $2,940 million driven by growth in every business segment. Core sales increased 8.2% to $2,986 million, surpassing the consensus estimate of $2,975 million.
Segment Results
Net sales from Display Technologies segment were $848 million compared with $780 million, as the company’s glass volume grew significantly faster due to the ramp of Corning’s Gen 10.5 manufacturing capacity, and better-than-expected glass pricing environment. The segment’s net income was $213 million compared with $192 million in the prior-year quarter.
Net sales from Optical Communications segment increased 6.5% year over year to $1,090 million, driven by hyperscale data center and optical fiber demand as well as sales from the 3M Communication Markets Division acquisition. The segment’s net income was $158 million compared with $150 million in the prior-year quarter.
Environmental Technologies segment’s net sales increased 15.5% to $366 million, driven by the accelerated adoption of gas particulate filters and strong growth in heavy-duty diesel. The segment’s net income was $65 million compared with $54 million in the prior-year quarter.
The Specialty Materials segment’s net sales were up 7.6% to $369 million, led by strong demand for the company’s portfolio of mobile consumer electronics glass solutions. The segment’s net income was $67 million compared with $64 million in the prior-year quarter.
Net sales from Life Sciences segment were up 6.1% to $260 million. The segment’s net income was $40 million compared with $31 million in the prior-year quarter, owing to higher sales volume and manufacturing performance optimization.
Other Details
Cost of sales increased 11.9% year over year to $1,875 million. Gross profit decreased to $1,065 million from $1,072 million. Core gross profit was $1,198 million compared with $1,123 million in the prior-year quarter.
Cash Flow & Liquidity
During the first six months of 2019, Corning generated $124 million of net cash from operating activities compared with $1,035 million in the year-ago period. As of Jun 30, 2019, the specialty glass maker had $1,178 million in cash and equivalents with $6,080 million of long-term debt.
Going Forward
Despite macro-economic headwinds, Corning continues to outpace the market it serves, which underscores the resilience of its portfolio. The company is extending strong performance under its new 2020-2023 Strategy & Growth Framework. It is focusing on its portfolio and utilizing financial strength to enhance shareholder returns. The company’s capabilities are becoming increasingly vital to diverse industries, and multiple opportunities support leadership across all of its market-access platforms.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -9.8% due to these changes.
VGM Scores
Currently, Corning has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Corning has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.