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Corning Stock Rises 75.9% YTD: How to Play the Stock?
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Key Takeaways
Corning stock is up 75.9% YTD, outpacing the tech sector and S&P 500 but trailing key rivals.
Specialty Materials revenue rose on strong demand for premium glass and expanded OEM adoption.
Rising free cash flow, upbeat earnings estimates and attractive valuation support investor confidence.
Corning Incorporated (GLW - Free Report) has gained 75.9% year to date compared with the communications components industry’s growth of 89.6%. The stock has outperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period.
Image Source: Zacks Investment Research
It has underperformed its competitors, such as CommScope Holding Company, Inc. (COMM - Free Report) and Amphenol Corporation (APH - Free Report) . CommScope has surged 265.1%, while Amphenol has gained 99.7% in the past year.
Corning Rides on Strength in Multiple Segments
Corning is benefiting from solid demand across multiple segments. Strength in the consumer electronics market is driving growth in the Specialty Materials segment. Net sales from Specialty Materials were $621 million, up 13% year over year, as demand for premium glass for mobile devices remained strong. The top line beat our estimate of $598 million.
Corning continues to focus on developing state-of-the-art cover materials, which have been deployed on more than 8 billion devices. Major smartphone manufacturers such as Samsung, Xiaomi and OnePlus have opted to deploy Corning’s cover materials. Apple is set to use Corning’s materials in all of its iPhones and smartwatches. The expanded collaboration with Apple has made consumer electronics a major pillar of the company’s springboard plan that focuses on significantly increasing net sales over the next few years. Per our estimate, the company is set to generate $2.28 billion in revenues from this segment, indicating 13.2% year-over-year growth.
The Enterprise business in Optical Communication reported 58% year-over-year growth in the third quarter. Hyperscaler customers are scaling out more and adding GPU clusters with more connected AI nodes. Fiber is needed to connect the AI cluster to the others. Corning boasts an extensive portfolio offering to AI data centers that allows it to gain a competitive edge over major rivals, such as CommScope and Amphenol. This growing AI proliferation is expected to be a major growth driver for the company. Per our estimate in 2025, GLW is set to generate $6.27 billion in Optical Communication segment, implying a rise of 34.7% year over year.
Some of its product suite is expected to benefit from government regulations. For instance, the fiber optic business is a direct beneficiary of the government-mandated bridging of the digital divide across the United States.
Image Source: Zacks Investment Research
Solid Growth in Cash Flow and Robust Liquidity Is a Positive
Consistent growth in adjusted free cash flow underscores efficient working capital management. Corning’s year to date adjusted free cash flow rose to $985 million from $844 million a year ago. In the third quarter, the company’s current ratio stood at 1.56. A current ratio of more than 1 suggests the company is well-positioned to pay off its short-term debt obligations. Its debt-to-capital ratio is 40 compared with the industry’s 41.2.
Estimate Revision Trend
Earnings estimates for Corning for 2025 and 2026 have increased over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of GLW
From a valuation standpoint, GLW is currently trading at a discount compared with the industry. Going by the price/earnings ratio, the company’s shares currently trade at 28.01 forward 12-month earnings, lower than 32.14 for the industry.
Image Source: Zacks Investment Research
End Note
Corning is benefiting from healthy demand in the Optical Communications and Specialty Materials segment. The growing adoption of innovative optical connectivity products for generative AI applications is expected to be a key growth driver in the Optical Communication segment. Upward estimate revision highlights growing investors’ confidence in the stock’s growth potential. Focusing on enhancing working capital management to improve free cash flow is a positive. Hence, with an attractive valuation and a Zacks Rank #1 (Strong Buy), Corning appears to be a good investment option right now. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Corning Stock Rises 75.9% YTD: How to Play the Stock?
Key Takeaways
Corning Incorporated (GLW - Free Report) has gained 75.9% year to date compared with the communications components industry’s growth of 89.6%. The stock has outperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period.
Image Source: Zacks Investment Research
It has underperformed its competitors, such as CommScope Holding Company, Inc. (COMM - Free Report) and Amphenol Corporation (APH - Free Report) . CommScope has surged 265.1%, while Amphenol has gained 99.7% in the past year.
Corning Rides on Strength in Multiple Segments
Corning is benefiting from solid demand across multiple segments. Strength in the consumer electronics market is driving growth in the Specialty Materials segment. Net sales from Specialty Materials were $621 million, up 13% year over year, as demand for premium glass for mobile devices remained strong. The top line beat our estimate of $598 million.
Corning continues to focus on developing state-of-the-art cover materials, which have been deployed on more than 8 billion devices. Major smartphone manufacturers such as Samsung, Xiaomi and OnePlus have opted to deploy Corning’s cover materials. Apple is set to use Corning’s materials in all of its iPhones and smartwatches. The expanded collaboration with Apple has made consumer electronics a major pillar of the company’s springboard plan that focuses on significantly increasing net sales over the next few years. Per our estimate, the company is set to generate $2.28 billion in revenues from this segment, indicating 13.2% year-over-year growth.
The Enterprise business in Optical Communication reported 58% year-over-year growth in the third quarter. Hyperscaler customers are scaling out more and adding GPU clusters with more connected AI nodes. Fiber is needed to connect the AI cluster to the others. Corning boasts an extensive portfolio offering to AI data centers that allows it to gain a competitive edge over major rivals, such as CommScope and Amphenol. This growing AI proliferation is expected to be a major growth driver for the company. Per our estimate in 2025, GLW is set to generate $6.27 billion in Optical Communication segment, implying a rise of 34.7% year over year.
Some of its product suite is expected to benefit from government regulations. For instance, the fiber optic business is a direct beneficiary of the government-mandated bridging of the digital divide across the United States.
Image Source: Zacks Investment Research
Solid Growth in Cash Flow and Robust Liquidity Is a Positive
Consistent growth in adjusted free cash flow underscores efficient working capital management. Corning’s year to date adjusted free cash flow rose to $985 million from $844 million a year ago. In the third quarter, the company’s current ratio stood at 1.56. A current ratio of more than 1 suggests the company is well-positioned to pay off its short-term debt obligations. Its debt-to-capital ratio is 40 compared with the industry’s 41.2.
Estimate Revision Trend
Earnings estimates for Corning for 2025 and 2026 have increased over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of GLW
From a valuation standpoint, GLW is currently trading at a discount compared with the industry. Going by the price/earnings ratio, the company’s shares currently trade at 28.01 forward 12-month earnings, lower than 32.14 for the industry.
Image Source: Zacks Investment Research
End Note
Corning is benefiting from healthy demand in the Optical Communications and Specialty Materials segment. The growing adoption of innovative optical connectivity products for generative AI applications is expected to be a key growth driver in the Optical Communication segment. Upward estimate revision highlights growing investors’ confidence in the stock’s growth potential. Focusing on enhancing working capital management to improve free cash flow is a positive. Hence, with an attractive valuation and a Zacks Rank #1 (Strong Buy), Corning appears to be a good investment option right now. You can see the complete list of today’s Zacks #1 Rank stocks here.