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Corning (GLW) to Expand its Presence in North Carolina

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As per a press release from the governor’s office in North Carolina, Corning Incorporated (GLW - Free Report) owned Corning Optical Communications LLC is slated to expand operations at its plants in Winston-Salem and Hickory, NC. The company is planning to expand its workforce at the Hickory plant by adding another 105 jobs and intends to invest $83.5 million in the state over a period of five years.

Although compensation packages will vary depend on hierarchy, the average annual salary for the new positions stands at $58,151.  We note that the average wage levels in Forsyth and Catawba counties currently stand at $49,817 and $38,238 respectively.

Governor McCrory stated in the release that Corning’s decision to expand in the state indicates that it has a highly-skilled workforce and provides easy accessibility to other markets and a favorable business climate..

Our Take

Corning is primarily a developer of advanced glass substrates for multiple markets. The company’s second-quarter earnings and revenues beat the respective Zacks Consensus Estimate. The company saw seasonal strength in Optical Communications in the quarter. These factors along with new and pipeline products and management’s recently announced capital allocation plans are positives.

We note that multiple factors should drive Corning’s fiber optic solutions business in the next few years, primarily the increasing use of mobile devices that require efficient data transfer and therefore efficient networking systems. Supporting this trend is the increasing adoption of cloud, which facilitates increased storage. Since both consumers and enterprises are using the network more, there is tremendous demand for quality networking.

Besides, data consumption patterns are changing. For instance, there is a growing propensity to consume video content thus creating the need for faster data transfer. Since optical networks are more efficient and most of the existing networks are copper-based, the demand for optical solutions is particularly strong.

Corning’s decision to expand its presence in North Carolina is likely to boost the state’s business climate. We expect the growing demand in the optical communications space to augur well for the company in the long run.

Zacks Rank & Key Picks

At present, Corning carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology space are Acacia Communications, Inc. (ACIA - Free Report) and UTStarcom Holdings Corp. , both sporting a Zacks Rank #1 (Strong Buy) and  Aerohive Networks, Inc. (HIVE - Free Report) , carrying a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerohive witnessed one positive estimate revision in the last 60 days and reported a positive earnings surprise of 18.75% in the last reported quarter.

Acacia also witnessed one positive revision over the same time frame and reported a positive earnings surprise of 230.77% in the last reported quarter.

UTStarcom reported a positive earnings surprise of 262.50% in the last reported quarter.

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