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Corning (GLW) Up 6.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Corning (GLW - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Corning due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Corning Beats Q1 Earnings and Revenue Estimates
Corning reported healthy first-quarter 2024 results, wherein both the top line and bottom line surpassed the respective Zacks Consensus Estimate. However, the company witnessed a revenue decline year over year due to demand softness in the Optical Communications and Life Sciences vertical. Signs of recovery in several end markets, healthy traction in Environmental Technologies, Specialty Materials and Display Technologies partially supported the top line. Pricing and productivity improvement initiatives strengthened profitability.
Net Income
On a GAAP basis, the company reported a net income of $209 million or 24 cents per share compared with $176 million or 20 cents per share in the year-ago quarter. Lower cost of sales, increase in interest income and other income led to higher net income during the quarter.
Core earnings were $330 million or 38 cents per share, down from $350 million or 41 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 2 cents.
Revenues
Net sales, on a GAAP basis, declined to $2.98 billion from $3.18 billion reported in the year-ago quarter. Weakness in several verticals impeded the revenue growth. Core sales were down 3% to $3.25 billion. However, the top line beat the consensus estimate of $3.12 billion.
Segment Results
Optical Communications generated $930 million in revenues, down 17% from $1.12 billion in the year-ago quarter. The top line beat our estimate of $896.6 million. Net income from this segment declined to $100 million from $159 million reported in the year-ago quarter. Lower demand from carriers owing to inventory corrections is affecting net sales in this vertical.
Display Technologies registered $872 million in revenues, up 14% year over year. Net sales beat our revenue estimate of $807.5 million. The segment’s net income was $201 million compared with the prior-year quarter’s figure of $160 million. Higher volume and the company’s strategy of price hikes supported the top line.
Net sales from Specialty Materials stood at $454 million, up 12% year over year, backed by solid demand for premium smartphone cover materials and semiconductor-related products. The top line beat our estimate of $416 million. Net income was $44 million, up from $39 million reported in the prior-year quarter.
Environmental Technologies contributed $455 million in net sales, up from $431 million in the year-ago quarter, backed by the growing adoption of gasoline particulate filters in China. The top line surpassed our revenue estimate of $418.7 million. Net income was $105 million, up from $82 million in the year-earlier quarter.
Revenues from the Life Sciences segment were $236 million compared with the year-earlier quarter’s figure of $256 million. The 8% year-over-year decline is primarily attributed to inventory adjustments in Europe and North America. Segment net income was $13 million, up 44% year over year, backed by greater productivity.
Hemlock and Emerging Growth Businesses reported a 19% decline in net sales year over year to $311 million, reflecting lower sales in Corning Pharmaceutical Technologies and lower pricing for solar-grade polysilicon. The company reported a net loss of $10 million from this segment against a net income of 16 million in the year-ago quarter.
Other Details
Quarterly gross profit decreased to $993 million from $1,003 million, with respective margins of 33.4% and 31.6%. Operating income was $254 million, down from $297 million in the prior-year quarter. Core gross margin was 36.8%, up from 35.2% in the year-ago quarter, owing to various productivity and pricing improvement actions across business operations.
Cash Flow & Liquidity
During the March quarter, Corning generated $96 million of net cash from operating activities against a cash utilization of $49 million in the year-earlier quarter. As of Mar 31, 2024, the company had $1.37 billion in cash in cash and cash equivalents with $7.05 billion of long-term debt.
Outlook
For the second quarter of 2024, core sales are estimated at $3.4 billion. Core EPS is projected to be in the range of 42-46 cents. Management expects sales will likely improve throughout 2024 and reasserts that first-quarter sales are the low point of the year. Corning remains optimistic about increasing its revenues by more than $3 billion in the medium term, delivering healthy profit and cash flow capitalizing on the market recovery.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Corning has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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 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 upward for the stock, and the magnitude of these revisions looks promising. 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) Up 6.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Corning (GLW - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Corning due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Corning Beats Q1 Earnings and Revenue Estimates
Corning reported healthy first-quarter 2024 results, wherein both the top line and bottom line surpassed the respective Zacks Consensus Estimate. However, the company witnessed a revenue decline year over year due to demand softness in the Optical Communications and Life Sciences vertical. Signs of recovery in several end markets, healthy traction in Environmental Technologies, Specialty Materials and Display Technologies partially supported the top line. Pricing and productivity improvement initiatives strengthened profitability.
Net Income
On a GAAP basis, the company reported a net income of $209 million or 24 cents per share compared with $176 million or 20 cents per share in the year-ago quarter. Lower cost of sales, increase in interest income and other income led to higher net income during the quarter.
Core earnings were $330 million or 38 cents per share, down from $350 million or 41 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 2 cents.
Revenues
Net sales, on a GAAP basis, declined to $2.98 billion from $3.18 billion reported in the year-ago quarter. Weakness in several verticals impeded the revenue growth. Core sales were down 3% to $3.25 billion. However, the top line beat the consensus estimate of $3.12 billion.
Segment Results
Optical Communications generated $930 million in revenues, down 17% from $1.12 billion in the year-ago quarter. The top line beat our estimate of $896.6 million. Net income from this segment declined to $100 million from $159 million reported in the year-ago quarter. Lower demand from carriers owing to inventory corrections is affecting net sales in this vertical.
Display Technologies registered $872 million in revenues, up 14% year over year. Net sales beat our revenue estimate of $807.5 million. The segment’s net income was $201 million compared with the prior-year quarter’s figure of $160 million. Higher volume and the company’s strategy of price hikes supported the top line.
Net sales from Specialty Materials stood at $454 million, up 12% year over year, backed by solid demand for premium smartphone cover materials and semiconductor-related products. The top line beat our estimate of $416 million. Net income was $44 million, up from $39 million reported in the prior-year quarter.
Environmental Technologies contributed $455 million in net sales, up from $431 million in the year-ago quarter, backed by the growing adoption of gasoline particulate filters in China. The top line surpassed our revenue estimate of $418.7 million. Net income was $105 million, up from $82 million in the year-earlier quarter.
Revenues from the Life Sciences segment were $236 million compared with the year-earlier quarter’s figure of $256 million. The 8% year-over-year decline is primarily attributed to inventory adjustments in Europe and North America. Segment net income was $13 million, up 44% year over year, backed by greater productivity.
Hemlock and Emerging Growth Businesses reported a 19% decline in net sales year over year to $311 million, reflecting lower sales in Corning Pharmaceutical Technologies and lower pricing for solar-grade polysilicon. The company reported a net loss of $10 million from this segment against a net income of 16 million in the year-ago quarter.
Other Details
Quarterly gross profit decreased to $993 million from $1,003 million, with respective margins of 33.4% and 31.6%. Operating income was $254 million, down from $297 million in the prior-year quarter. Core gross margin was 36.8%, up from 35.2% in the year-ago quarter, owing to various productivity and pricing improvement actions across business operations.
Cash Flow & Liquidity
During the March quarter, Corning generated $96 million of net cash from operating activities against a cash utilization of $49 million in the year-earlier quarter. As of Mar 31, 2024, the company had $1.37 billion in cash in cash and cash equivalents with $7.05 billion of long-term debt.
Outlook
For the second quarter of 2024, core sales are estimated at $3.4 billion. Core EPS is projected to be in the range of 42-46 cents. Management expects sales will likely improve throughout 2024 and reasserts that first-quarter sales are the low point of the year. Corning remains optimistic about increasing its revenues by more than $3 billion in the medium term, delivering healthy profit and cash flow capitalizing on the market recovery.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Corning has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Corning has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.