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Corning (GLW) Down 2.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Corning (GLW - Free Report) . Shares have lost about 2.7% in that time frame, outperforming 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 Beats on Q4 Earnings Despite Lower Revenues
Corning reported healthy fourth-quarter 2022 results, wherein both the bottom line and top line beat the Zacks Consensus Estimate. The company has offered a tepid guidance for 2023 based on the challenging macroeconomic environment. Shares mostly trended down in pre-market trading owing to the muted outlook as investors probably expected a healthy growth momentum.
Net Income
On a GAAP basis, net loss in the quarter was $36 million or loss of 4 cents per share against net income of $487 million or 56 cents per share in the prior-year quarter. The sharp year-over-year decline was primarily attributable to top-line contraction. Excluding non-recurring items, core net income for the reported quarter was $402 million or 47 cents per share compared with $465 million or 54 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents.
For full year 2022, GAAP net income decreased to $1,316 million or $1.54 per share from $1,906 million or $1.28 per share in 2021. Core net income was $1,794 million or $2.09 per share compared with $1,811 million or $2.07 per share in 2021.
Revenues
Quarterly GAAP net sales decreased to $3,406 million from $3,676 million as strong growth in Environmental Technologies and Hemlock and Emerging Growth Businesses were more than offset by lower sales in Optical Communications, Display Technologies and Specialty Materials. Core sales declined to $3,633 million from $3,714 million but beat the consensus estimate of $3,543 million.
For full year 2022, GAAP net sales improved to $14,189 million from $14,082 million, while core sales were up to $14,805 million from $14,120 million.
Segment Results
Net sales in Optical Communications decreased marginally to $1,195 million from $1,206 million as increased capital spending to address the demand for 5G, broadband and the cloud were offset by paucity of customer projects. The segment’s contribution to net income was $130 million compared with $155 million in the prior-year quarter.
Net sales in Display Technologies were $783 million compared with $942 million in the prior-year quarter, owing to lower volume and the lowest panel maker utilization level since 2008. The segment’s net income was $171 million compared with $252 million in the year-ago quarter.
Specialty Materials’ net sales were down to $505 million from $518 million owing to soft demand in the smartphone, tablet, and notebook markets. The segment’s net income was $78 million compared with $92 million a year ago.
Environmental Technologies’ net sales were up 11.6% year over year to $394 million driven by increased volume and strong operating performance. The segment’s net income was $69 million, up from $54 million in the year-earlier quarter.
Net sales in Life Sciences declined to $294 million from $317 million on lower demand for COVID-related products. The segment’s net income declined to $31 million from $49 million a year ago. The decline was due to COVID-related lockdown restrictions in China, which adversely impacted output.
In Hemlock and Emerging Growth Businesses, net sales increased 22.2% year over year to $462 million. 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 income was $4 million against a net loss of $7 million a year ago.
Other Details
Cost of sales increased 3.6% year over year to $2,491 million. Gross profit declined to $915 million from $1,271 million on lower revenues. Operating income was $86 million compared with $483 million a year ago.
Cash Flow & Liquidity
During fourth-quarter 2022, Corning generated $617 million of cash from operating activities compared with $1,023 million in the year-ago quarter, bringing the respective tallies for the years to $2,615 million and $3,412 million. Free cash flow for 2022 decreased to $1,243 million from $1,765 million in 2021. As of Dec 31, 2022, the company had $1,671 million in cash and cash equivalents with $6,687 million of long-term debt compared with respective tallies of $2,148 million and $6,989 million in the prior-year period.
Outlook
Corning expects macroeconomic challenges to continue impact its first-quarter 2023 sales. For the first quarter, the company expects core sales in the range of $3.2 billion to $3.4 billion with core earnings per share of 35 cents to 42 cents as pandemic-related disruptions in China continue to affect operations.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -14.55% 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 B on the value side, putting it in the top 40% 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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Corning (GLW) Down 2.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Corning (GLW - Free Report) . Shares have lost about 2.7% in that time frame, outperforming 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 Beats on Q4 Earnings Despite Lower Revenues
Corning reported healthy fourth-quarter 2022 results, wherein both the bottom line and top line beat the Zacks Consensus Estimate. The company has offered a tepid guidance for 2023 based on the challenging macroeconomic environment. Shares mostly trended down in pre-market trading owing to the muted outlook as investors probably expected a healthy growth momentum.
Net Income
On a GAAP basis, net loss in the quarter was $36 million or loss of 4 cents per share against net income of $487 million or 56 cents per share in the prior-year quarter. The sharp year-over-year decline was primarily attributable to top-line contraction. Excluding non-recurring items, core net income for the reported quarter was $402 million or 47 cents per share compared with $465 million or 54 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents.
For full year 2022, GAAP net income decreased to $1,316 million or $1.54 per share from $1,906 million or $1.28 per share in 2021. Core net income was $1,794 million or $2.09 per share compared with $1,811 million or $2.07 per share in 2021.
Revenues
Quarterly GAAP net sales decreased to $3,406 million from $3,676 million as strong growth in Environmental Technologies and Hemlock and Emerging Growth Businesses were more than offset by lower sales in Optical Communications, Display Technologies and Specialty Materials. Core sales declined to $3,633 million from $3,714 million but beat the consensus estimate of $3,543 million.
For full year 2022, GAAP net sales improved to $14,189 million from $14,082 million, while core sales were up to $14,805 million from $14,120 million.
Segment Results
Net sales in Optical Communications decreased marginally to $1,195 million from $1,206 million as increased capital spending to address the demand for 5G, broadband and the cloud were offset by paucity of customer projects. The segment’s contribution to net income was $130 million compared with $155 million in the prior-year quarter.
Net sales in Display Technologies were $783 million compared with $942 million in the prior-year quarter, owing to lower volume and the lowest panel maker utilization level since 2008. The segment’s net income was $171 million compared with $252 million in the year-ago quarter.
Specialty Materials’ net sales were down to $505 million from $518 million owing to soft demand in the smartphone, tablet, and notebook markets. The segment’s net income was $78 million compared with $92 million a year ago.
Environmental Technologies’ net sales were up 11.6% year over year to $394 million driven by increased volume and strong operating performance. The segment’s net income was $69 million, up from $54 million in the year-earlier quarter.
Net sales in Life Sciences declined to $294 million from $317 million on lower demand for COVID-related products. The segment’s net income declined to $31 million from $49 million a year ago. The decline was due to COVID-related lockdown restrictions in China, which adversely impacted output.
In Hemlock and Emerging Growth Businesses, net sales increased 22.2% year over year to $462 million. 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 income was $4 million against a net loss of $7 million a year ago.
Other Details
Cost of sales increased 3.6% year over year to $2,491 million. Gross profit declined to $915 million from $1,271 million on lower revenues. Operating income was $86 million compared with $483 million a year ago.
Cash Flow & Liquidity
During fourth-quarter 2022, Corning generated $617 million of cash from operating activities compared with $1,023 million in the year-ago quarter, bringing the respective tallies for the years to $2,615 million and $3,412 million. Free cash flow for 2022 decreased to $1,243 million from $1,765 million in 2021. As of Dec 31, 2022, the company had $1,671 million in cash and cash equivalents with $6,687 million of long-term debt compared with respective tallies of $2,148 million and $6,989 million in the prior-year period.
Outlook
Corning expects macroeconomic challenges to continue impact its first-quarter 2023 sales. For the first quarter, the company expects core sales in the range of $3.2 billion to $3.4 billion with core earnings per share of 35 cents to 42 cents as pandemic-related disruptions in China continue to affect operations.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -14.55% 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 B on the value side, putting it in the top 40% 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.