A month has gone by since the last earnings report for Corning (GLW - Free Report) . Shares have lost about 6.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Corning Beats on Q1 Earnings, Raises 2022 Sales View
Corning reported impressive first-quarter 2022 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate.
Net Income
On a GAAP basis, net income in the quarter was $581 million or 68 cents per share compared with $599 million or 67 cents per share in the prior-year quarter. Core net income increased to $465 million or 54 cents per share from $402 million or 45 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents.
Revenues
Quarterly GAAP net sales increased 11.9% year over year to $3,680 million, driven by strong growth in Optical Communications, Display Technologies and Hemlock’s solar materials. Core sales grew to $3,744 million from $3,263 million. The top line beat the consensus estimate of $3,563 million.
Segment Results
Net sales in Optical Communications increased 27.9% year over year to $1,198 million as network operators increased capital spending to address the demand for 5G, broadband and the cloud. The segment’s net income was $166 million compared with $111 million in the prior-year quarter.
Net sales in Display Technologies were $959 million compared with $863 million in the prior-year quarter, thanks to the favorable pricing. The segment’s net income was $236 million compared with $213 million in the year-ago quarter. The company expects glass prices to be up slightly sequentially in the second quarter.
Specialty Materials’ net sales were up 9.3% year over year to $493 million. The company is witnessing significant demand for its premium cover materials and Advanced Optics products, backed by strength in the IT, mobile device and semiconductor markets. The segment’s net income was $75 million compared with $91 million a year ago.
Environmental Technologies’ net sales declined 7.3% year over year to $409 million as component shortages limited automotive production. The segment’s net income was $74 million, stable year over year.
Net sales in Life Sciences were up 3.3% year over year to $310 million. The segment’s net income declined to $42 million from $48 million a year ago. The decline was due to COVID-related operational challenges in the first half of the quarter, which adversely impacted output.
In Hemlock and Emerging Growth Businesses, net sales increased 38.4% year over year to $375 million. This was primarily driven by increased sales of polysilicon. Demand for Hemlock’s solar materials grew while sales of semiconductor materials remained strong. Automotive Glass Solutions and Corning Pharmaceutical Technologies also contributed to growth. The segment’s net loss was $8 million compared with a net loss of $24 million a year ago.
Other Details
Cost of sales increased 12.3% year over year to $2,397 million. Gross profit improved to $1,283 million from $1,156 million. Core gross profit was $1,370 million compared with $1,167 million in the prior-year quarter, with respective margins of 36.6% and 35.8%. Operating income was $570 million compared with $502 million a year ago.
Cash Flow & Liquidity
During first-quarter 2022, Corning generated $534 million of cash from operating activities compared with $723 million in the year-ago quarter. Free cash flow decreased to $171 million from $372 million.
As of Mar 31, 2022, the company had $2,016 million in cash and cash equivalents with $6,839 million of long-term debt.
Outlook
Corning expects solid top-and bottom-line growth for 2022 while remaining focused on pricing, capital efficiency and cash generation. For the full year, management raised its expectations for sales to exceed $15 billion, with sales growing at a high-single-digit percentage and EPS growing up to a few percentage points faster than sales.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Corning has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 A. 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 has been net zero. 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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A month has gone by since the last earnings report for Corning (GLW - Free Report) . Shares have lost about 6.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Corning Beats on Q1 Earnings, Raises 2022 Sales View
Corning reported impressive first-quarter 2022 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate.
Net Income
On a GAAP basis, net income in the quarter was $581 million or 68 cents per share compared with $599 million or 67 cents per share in the prior-year quarter. Core net income increased to $465 million or 54 cents per share from $402 million or 45 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents.
Revenues
Quarterly GAAP net sales increased 11.9% year over year to $3,680 million, driven by strong growth in Optical Communications, Display Technologies and Hemlock’s solar materials. Core sales grew to $3,744 million from $3,263 million. The top line beat the consensus estimate of $3,563 million.
Segment Results
Net sales in Optical Communications increased 27.9% year over year to $1,198 million as network operators increased capital spending to address the demand for 5G, broadband and the cloud. The segment’s net income was $166 million compared with $111 million in the prior-year quarter.
Net sales in Display Technologies were $959 million compared with $863 million in the prior-year quarter, thanks to the favorable pricing. The segment’s net income was $236 million compared with $213 million in the year-ago quarter. The company expects glass prices to be up slightly sequentially in the second quarter.
Specialty Materials’ net sales were up 9.3% year over year to $493 million. The company is witnessing significant demand for its premium cover materials and Advanced Optics products, backed by strength in the IT, mobile device and semiconductor markets. The segment’s net income was $75 million compared with $91 million a year ago.
Environmental Technologies’ net sales declined 7.3% year over year to $409 million as component shortages limited automotive production. The segment’s net income was $74 million, stable year over year.
Net sales in Life Sciences were up 3.3% year over year to $310 million. The segment’s net income declined to $42 million from $48 million a year ago. The decline was due to COVID-related operational challenges in the first half of the quarter, which adversely impacted output.
In Hemlock and Emerging Growth Businesses, net sales increased 38.4% year over year to $375 million. This was primarily driven by increased sales of polysilicon. Demand for Hemlock’s solar materials grew while sales of semiconductor materials remained strong. Automotive Glass Solutions and Corning Pharmaceutical Technologies also contributed to growth. The segment’s net loss was $8 million compared with a net loss of $24 million a year ago.
Other Details
Cost of sales increased 12.3% year over year to $2,397 million. Gross profit improved to $1,283 million from $1,156 million. Core gross profit was $1,370 million compared with $1,167 million in the prior-year quarter, with respective margins of 36.6% and 35.8%. Operating income was $570 million compared with $502 million a year ago.
Cash Flow & Liquidity
During first-quarter 2022, Corning generated $534 million of cash from operating activities compared with $723 million in the year-ago quarter. Free cash flow decreased to $171 million from $372 million.
As of Mar 31, 2022, the company had $2,016 million in cash and cash equivalents with $6,839 million of long-term debt.
Outlook
Corning expects solid top-and bottom-line growth for 2022 while remaining focused on pricing, capital efficiency and cash generation. For the full year, management raised its expectations for sales to exceed $15 billion, with sales growing at a high-single-digit percentage and EPS growing up to a few percentage points faster than sales.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Corning has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 A. 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 has been net zero. Notably, Corning has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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