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Corning (GLW) Boosts Fiber Output in EU With Poland Facility

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Corning Incorporated (GLW - Free Report) recently expanded its optical cable manufacturing capacity in the European Union (“EU”) by setting up a new production facility in Mszczonów, Poland. In addition to generating about 250 jobs initially to boost regional economic development, the investment is likely to help meet the increasing demand for high-speed connectivity in Europe via large-scale production of low-cost optical fibers.

A surge in demand for broadband connectivity has led to a wide proliferation of fiber infrastructure throughout the EU and the surrounding areas. The new facility will augment Corning’s optical cable and connectivity components production in Stryków, Poland while strengthening its two-decade-old manufacturing operations in the country.

With this, the company has invested more than $500 million since 2020 to increase its fiber and cable manufacturing capacity in domestic and international markets. Just a few days back, it set up a new production facility in Gilbert, AZ, and invested about $150 million a year ago to expand fiber production in its Catawba County facility in North Carolina.

Multiple factors are likely to drive the company’s fiber-optic solutions business over the next several years, primarily the increasing use of mobile devices that require efficient data transfer and networking systems. Supporting this trend is the proliferation of clouds, which is resulting in increased storage and even computing on a virtual plane.

Since both consumers and enterprises are using the network more, there is a tremendous demand for quality networking. As optical networks are more efficient and most existing networks are copper-based, the demand for optical solutions is solid. Corning has several products focused on the datacenter with a portfolio consisting of optical fiber, hardware, cable, and connectors that help it to create optical solutions to meet evolving customer needs.

Despite continued chip shortage and inflated raw material prices, Corning expects to witness 6-8% compound annual sales growth and 12-15% compound annual earnings per share growth through 2023 while investing $10-$12 billion in research, development & engineering, capital, and mergers and acquisitions. It plans to expand its operating margin and return on invested capital and deliver $8-$10 billion to shareholders, including an annual dividend per share increase of at least 10%.

To achieve its goals, the company expects an incremental $3-$4 billion in annual sales and an improvement in profitability by the end of 2023. GLW is extending performance under its 2020-2023 Strategy & Growth Framework and focusing on improving its product portfolio and utilizing financial strength to enhance shareholder returns.

The stock has lost 14.7% over the past year compared with the industry’s decline of 5.6%.

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Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #4 (Sell) stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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