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Corning (GLW) Q3 Earnings Beat on Demand Growth, Innovation

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Corning Incorporated (GLW - Free Report) reported healthy third-quarter 2020 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate.

Bottom Line

On a GAAP basis, net income in the quarter was $427 million or 48 cents per share compared with $337 million or 38 cents per share in the year-ago quarter. The improvement was primarily driven by a net transaction-related gain of $498 million.

Core net income came in at $380 million or 43 cents per share compared with $397 million or 44 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents, delivering a positive surprise of 13.2%.

Corning Incorporated Price, Consensus and EPS Surprise Corning Incorporated Price, Consensus and EPS Surprise

Corning Incorporated price-consensus-eps-surprise-chart | Corning Incorporated Quote

Top Line

Quarterly GAAP net sales increased 2.3% year over year to $3,001 million, led by Specialty Materials and Display Technologies. Core sales grew to $3,007 million from $2,969 million in the year-ago quarter. The top line surpassed the consensus estimate of $2,921 million.

Segment Results

Net sales in Optical Communications declined 9.7% year over year to $909 million. This was due to the decline in the passive optical market. The segment’s net income was $115 million compared with $127 million in the prior-year quarter.

Net sales in Display Technologies were $827 million compared with $793 million in the prior-year quarter, supported by higher glass volume. The segment’s net income was $196 million compared with $185 million in the year-ago quarter.

Specialty Materials’ net sales were up 23.1% year over year to $570 million. The upside was driven by demand for premium glasses, Corning’s new glass-ceramic product (Ceramic Shield) and strength in its products for the IT and wearable markets. The segment’s net income was $146 million compared with $92 million in the prior-year quarter.

Environmental Technologies’ net sales fell 4.5% year over year to $379 million. This was a result of vehicle manufacturers’ suspended production in key markets. The segment’s net income was $69 million compared with $79 million in the prior-year quarter.

Net sales in Life Sciences were down 13% year over year to $223 million. This was due to research lab closures in EMEA and North America. The segment’s net income declined to $28 million from $41 million reported in the prior-year quarter.

Other Details

Quarterly cost of sales increased 4.3% year over year to $2,000 million. Gross profit slipped to $1,001 million from $1,017 million. Core gross profit was $1,130 million compared with $1,156 million recorded in the prior-year quarter, with respective margins of 37.6% and 38.9%. Operating income was $257 million compared with $365 million in the prior-year quarter.

Cash Flow & Liquidity

In the first nine months of 2020, Corning generated $1,406 million of net cash from operating activities compared with $1,013 million in the prior-year period. As of Sep 30, the company had $2,514 million in cash and cash equivalents with $7,822 million of long-term debt.

Zacks Rank & Stocks to Consider

Corning has a Zacks Rank #3 (Hold), at present.

Some better-ranked stocks in the broader industry are Viasat (VSAT - Free Report) , Viavi Solutions (VIAV - Free Report) and Harmonic (HLIT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Viasat delivered a trailing four-quarter positive earnings surprise of 361.3%, on average.

Viavi delivered a trailing four-quarter positive earnings surprise of 17.5%, on average.

Harmonic delivered a trailing four-quarter positive earnings surprise of 4.4%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.

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