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Corning (GLW) Down 2.2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Corning (GLW - Free Report) . Shares have lost about 2.2% in that time frame, underperforming 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 Q1 Earnings Despite Lower Revenues
Corning reported healthy first-quarter 2023 results, with the bottom and the top line beating the Zacks Consensus Estimate. Recession-level demand and overall weakness in China affected company’s net sales during the quarter. However, the company’s price and productivity enhancement strategy combined with the improvement in panel-maker utilization partially offset the declining trend.
Net Income
Quarterly GAAP net income was $176 million or an income of 20 cents compared with a net income of $581 million or 68 cents per share in the year-ago quarter. The downside is primarily due to top-line contraction and significantly lower income from translated earnings contract and other income sources year over year. Core net income declined to $350 million or 41 cents per share from $465 million or 54 cents per share reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 2 cents.
Revenues
On a GAAP basis, net sales declined to $3,178 million from $3,680 million reported in the year-ago quarter. Declining net sales in Display Technologies, Optical Communications and Specialty Materials, due to weak demand in several key markets, hindered the top-line performance. Core sales totaled $3,367, down 10% year over year from $3,744 million. The top line beat the consensus estimate of $3,325 million.
Segment Results
Net sales in Optical Communications declined to $1,125 million from $1,198 million recorded in the prior-year quarter. Net income was $159 million compared with $166 million in the year-ago quarter. Despite a greater-than-normal decline in seasonal volume, pricing and productivity enhancement cushioned net sales in this segment.
Net sales in Display Technologies were reported at $763 million, down 20% year over year. Despite a decline in volume and glass prices, improved market condition in China and the recovery of panel maker utilization partially reversed the declining trend in this segment. Net income was $160 million compared with the prior-year quarter’s figure of $236 million.
Revenues from Specialty Materials were $406 million, down 18% year over year, primarily due to seasonality patterns. Net income was $39 million, down from $75 million reported in the prior-year quarter. Soft demand in smartphone and IT end market hampered the net sales from this segment. Environmental Technologies witnessed a 5% revenue growth year over year to $431 million. Rising demand for gasoline particulate filter combined with enhanced productivity supported the segment’s top line. The segment’s net income was $82 million, up from $74 million in the year-earlier quarter.
Revenues from Life Sciences segment declined to $256 million, down from the year-earlier quarter’s tally of $310 million. Net income was down to $9 million from $42 million in the year-ago quarter. Inventory adjustments and lower demand for COVID-related products affected net sales. Hemlock and Emerging Growth Businesses witnessed a 3% growth in net sales year over year to $386 million. The segment’s net income was $16 million against a net loss of $8 million a year ago.
Other Details
Gross profit declined to $1,003 million from $1,283 million, thanks to falling revenues. Operating income stood at $297 million compared with $570 million in the year-ago quarter. Sequentially, core gross margin improved to 35.2% and operating margin rose to 15.5%, driven by the company’s initiative to improve pricing and productivity.
Cash Flow & Liquidity
During the first quarter of 2023, Corning utilized $49 million of net cash for operating activities against a cash flow of $534 million in the prior-year period. The company registered a negative free cash flow of $383 million against the prior year’s figure of $171 million.
As of Mar 31, 2023, Corning had $1,146 million in cash in cash and cash equivalents with $6,654 million of long-term debt.
Outlook
For the second quarter of 2023, Corning estimates core sales in the band of $3.4 billion to $3.6 billion. Core earnings per share is expected in the range of 42-49 cents. Despite the weakness in multiple markets, management expects sales, profitability and cash flow to improve. Management is planning to continue to better align its cost structure, improve pricing and productivity and take further profit improvement initiatives to push the company in the long-term growth trajectory.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Corning has a subpar Growth Score of D, though it is lagging a bit 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 second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 2.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Corning (GLW - Free Report) . Shares have lost about 2.2% in that time frame, underperforming 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 Q1 Earnings Despite Lower Revenues
Corning reported healthy first-quarter 2023 results, with the bottom and the top line beating the Zacks Consensus Estimate. Recession-level demand and overall weakness in China affected company’s net sales during the quarter. However, the company’s price and productivity enhancement strategy combined with the improvement in panel-maker utilization partially offset the declining trend.
Net Income
Quarterly GAAP net income was $176 million or an income of 20 cents compared with a net income of $581 million or 68 cents per share in the year-ago quarter. The downside is primarily due to top-line contraction and significantly lower income from translated earnings contract and other income sources year over year. Core net income declined to $350 million or 41 cents per share from $465 million or 54 cents per share reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 2 cents.
Revenues
On a GAAP basis, net sales declined to $3,178 million from $3,680 million reported in the year-ago quarter. Declining net sales in Display Technologies, Optical Communications and Specialty Materials, due to weak demand in several key markets, hindered the top-line performance. Core sales totaled $3,367, down 10% year over year from $3,744 million. The top line beat the consensus estimate of $3,325 million.
Segment Results
Net sales in Optical Communications declined to $1,125 million from $1,198 million recorded in the prior-year quarter. Net income was $159 million compared with $166 million in the year-ago quarter. Despite a greater-than-normal decline in seasonal volume, pricing and productivity enhancement cushioned net sales in this segment.
Net sales in Display Technologies were reported at $763 million, down 20% year over year. Despite a decline in volume and glass prices, improved market condition in China and the recovery of panel maker utilization partially reversed the declining trend in this segment. Net income was $160 million compared with the prior-year quarter’s figure of $236 million.
Revenues from Specialty Materials were $406 million, down 18% year over year, primarily due to seasonality patterns. Net income was $39 million, down from $75 million reported in the prior-year quarter. Soft demand in smartphone and IT end market hampered the net sales from this segment. Environmental Technologies witnessed a 5% revenue growth year over year to $431 million. Rising demand for gasoline particulate filter combined with enhanced productivity supported the segment’s top line. The segment’s net income was $82 million, up from $74 million in the year-earlier quarter.
Revenues from Life Sciences segment declined to $256 million, down from the year-earlier quarter’s tally of $310 million. Net income was down to $9 million from $42 million in the year-ago quarter. Inventory adjustments and lower demand for COVID-related products affected net sales. Hemlock and Emerging Growth Businesses witnessed a 3% growth in net sales year over year to $386 million. The segment’s net income was $16 million against a net loss of $8 million a year ago.
Other Details
Gross profit declined to $1,003 million from $1,283 million, thanks to falling revenues. Operating income stood at $297 million compared with $570 million in the year-ago quarter. Sequentially, core gross margin improved to 35.2% and operating margin rose to 15.5%, driven by the company’s initiative to improve pricing and productivity.
Cash Flow & Liquidity
During the first quarter of 2023, Corning utilized $49 million of net cash for operating activities against a cash flow of $534 million in the prior-year period. The company registered a negative free cash flow of $383 million against the prior year’s figure of $171 million.
As of Mar 31, 2023, Corning had $1,146 million in cash in cash and cash equivalents with $6,654 million of long-term debt.
Outlook
For the second quarter of 2023, Corning estimates core sales in the band of $3.4 billion to $3.6 billion. Core earnings per share is expected in the range of 42-49 cents. Despite the weakness in multiple markets, management expects sales, profitability and cash flow to improve. Management is planning to continue to better align its cost structure, improve pricing and productivity and take further profit improvement initiatives to push the company in the long-term growth trajectory.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Corning has a subpar Growth Score of D, though it is lagging a bit 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 second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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.