Categories Analysis, Industrials

Corning Stock: Does resilience during COVID offer new buying opportunity?

Corning's emission control solutions continue to gain traction as regulatory pressure builds on automotive companies to adopt environment-friendly practices

Corning Inc. (NYSE: GLW), a leading producer of specialty glass and ceramic products, maintained stable financial performance in recent months despite the unfavorable market conditions, thanks to the booming smartphone market and innovations in telecommunications such as 5G.

Investing in GLW

Corning’s stock has recovered at a slow but steady pace since crashing to dismal lows more than two decades ago after the telecom bubble burst. Though the momentum waned a bit in the early days of the pandemic the shares quickly bounced back and hit multi-year highs, eliciting significant investor interest. While most of the factors are in GLW’s favor, competition and pricing pressure might weigh on its prospects going forward. The consensus rating on the stock is moderate buy, with a target price that represents a 13% growth.

Read management/analysts’ comments on quarterly reports

The New York-headquartered company, which makes the popular Gorilla brand of glasses, maintained stable performance even during the pandemic amid growing demand for its display products used in smartphones and LCD televisions. Mobile phones produced by gadget giants Apple (NASDAQ: AAPL) and Samsung come with Corning’s display glass. Also, the company’s emission control solutions continue to gain traction as regulatory pressure builds on automotive companies to adopt environment-friendly practices.

China Shift

Corning has been in the market for more than one-and-half century and mostly stayed on the growth path. In an effort to streamline operations and maintain margin growth, in the wake of growing competition from emerging markets, the company is shifting the production of high-end television panels to facilities in China.

“We’re leveraging our competitive advantages to deliver stable returns. I’m pleased to note that in Quarter 1, we experienced the most favorable first-quarter pricing environment in more than a decade. And we announced a moderate increase to our display glass substrate prices for the second quarter. Stepping back, we are the lowest-cost producer of display glass, which makes us significantly more profitable than our competitors,” said Corning’s chief executive officer Wendell Weeks while interacting with analysts at the first-quarter earnings conference call.

Upbeat Quarterly Data

Corning reported stronger-than-expected earnings consistently over the past several years. The company entered fiscal 2021 on a high note, with adjusted earnings more than doubling to 45 cents and exceeding analysts’ forecast. It was driven by a 38% jump in sales to $3.3 billion, which also beat the Street view. Interestingly, all business segments expanded in double digits. The management exuded confidence that the growth momentum would be sustained throughout the current fiscal year.

Apple losing its sheen to Samsung in the smartphone war

Corning’s stock rose about 17% in the past six months, outperforming the S&P 500 index. It closed the last trading session at $43.16, up 0.28%.


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