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Why Is Corning (GLW) Up 3.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Corning (GLW - Free Report) . Shares have added about 3.8% 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 catalysts.
Corning reported decent first-quarter 2020 results, with the top and the bottom line surpassing their respective Zacks Consensus Estimate. However, revenues and earnings declined on a year-over-year basis.
The specialty glass maker has withdrawn its 2020 guidance due to the economic uncertainty and disruption caused by COVID-19. It continues to focus on three core priorities — preserving the financial strength of the company, protecting employees and communities as well as delivering on customer commitments.
Bottom Line
On a GAAP basis, net loss for the March quarter was $96 million or loss of 16 cents per share against a net income of $499 million or 55 cents per share in the year-ago quarter. The downside was primarily caused by an operating loss.
However, quarterly core net income came in at $177 million or 20 cents per share compared with 365 million or 40 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents.
Revenues
First-quarter GAAP net sales were down 15% year over year to $2,391 million. This downtick was caused by the material impact of changing market and customer dynamics in the Optical Communications, Display Technologies and Environmental Technologies business segments.
Quarterly core sales declined to $2,529 million from $2,850 million recorded in the year-ago quarter. However, the top line surpassed the consensus mark of $2,508 million.
Segment Results
Net sales in the Optical Communications segment, which accounts for the lion’s share of total revenues, declined 25.7% year over year to $791 million (in line with management’s expectations). This indicates overall market weakness induced by customers’ project spending decisions. The business continues to adjust its cost structure to match near-term sales. The segment’s net income was $29 million compared with $142 million in the prior-year quarter, impacted by lower volume.
Net sales in Display Technologies were $751 million compared with $818 million in the prior-year quarter due to lower glass volume and prices. The segment’s net income was $152 million compared with $208 million in the year-ago quarter.
Specialty Materials’ net sales were up 13.9% to $352 million, which exceeded management’s expectations. The upside was driven by strong demand for premium glasses, other Gorilla Glass innovations and Advanced Optics products. The segment’s net income was $51 million compared with $49 million in the prior-year quarter.
Environmental Technologies’ net sales fell 11.6% to $320 million (below management’s expectations), as vehicle manufacturers suspended production in key markets. The segment’s net income was $35 million compared with $55 million in the prior-year quarter, impacted by lower volume.
Net sales in Life Sciences were up 6.2% to $258 million, which were in line with management’s expectations. The segment’s net income improved to $38 million from $31 million reported in the prior-year quarter, driven by higher sales volume and manufacturing performance optimization.
Other Details
Quarterly cost of sales increased 6.8% year over year to $1,830 million. Gross profit declined to $561 million from $1,099 million due to lower revenues and higher cost of sales. Core gross profit was $844 million compared with $1,139 million recorded in the prior-year quarter, with a respective margin of 33% and 40%. Operating loss was $121 million against an operating income of $420 million in the prior-year quarter.
Cash Flow & Liquidity
In the first quarter, Corning generated $248 million of net cash from operations against a cash utilization of $29 million in the year-ago quarter. As of Mar 31, the company had $2,025 million in cash and equivalents with $7,815 million of long-term debt.
Going Forward
Corning is affected by the global economic disruptions and health consequences caused by the pandemic. In the first quarter, the company took action to navigate through these unprecedented times and is planning to take further measures in the ongoing quarter.
Corning operates on a strong financial foundation, which positions it for long-term growth while adjusting to near-term conditions. As the company anticipates lower sales, it is adjusting its operating plan to reduce costs and capital spending.
Moreover, the company has no debt due over the next two years and it expects to maintain a strong cash balance as well as generate positive free cash flow for 2020. It plans to maintain dividends and pause share buybacks.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -44.53% due to these changes.
VGM Scores
Currently, Corning has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 this revision indicates a downward shift. It's no surprise Corning has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Corning (GLW) Up 3.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Corning (GLW - Free Report) . Shares have added about 3.8% 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 catalysts.
Corning Beats Q1 Earnings Estimates, Withdraws Guidance
Corning reported decent first-quarter 2020 results, with the top and the bottom line surpassing their respective Zacks Consensus Estimate. However, revenues and earnings declined on a year-over-year basis.
The specialty glass maker has withdrawn its 2020 guidance due to the economic uncertainty and disruption caused by COVID-19. It continues to focus on three core priorities — preserving the financial strength of the company, protecting employees and communities as well as delivering on customer commitments.
Bottom Line
On a GAAP basis, net loss for the March quarter was $96 million or loss of 16 cents per share against a net income of $499 million or 55 cents per share in the year-ago quarter. The downside was primarily caused by an operating loss.
However, quarterly core net income came in at $177 million or 20 cents per share compared with 365 million or 40 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents.
Revenues
First-quarter GAAP net sales were down 15% year over year to $2,391 million. This downtick was caused by the material impact of changing market and customer dynamics in the Optical Communications, Display Technologies and Environmental Technologies business segments.
Quarterly core sales declined to $2,529 million from $2,850 million recorded in the year-ago quarter. However, the top line surpassed the consensus mark of $2,508 million.
Segment Results
Net sales in the Optical Communications segment, which accounts for the lion’s share of total revenues, declined 25.7% year over year to $791 million (in line with management’s expectations). This indicates overall market weakness induced by customers’ project spending decisions. The business continues to adjust its cost structure to match near-term sales. The segment’s net income was $29 million compared with $142 million in the prior-year quarter, impacted by lower volume.
Net sales in Display Technologies were $751 million compared with $818 million in the prior-year quarter due to lower glass volume and prices. The segment’s net income was $152 million compared with $208 million in the year-ago quarter.
Specialty Materials’ net sales were up 13.9% to $352 million, which exceeded management’s expectations. The upside was driven by strong demand for premium glasses, other Gorilla Glass innovations and Advanced Optics products. The segment’s net income was $51 million compared with $49 million in the prior-year quarter.
Environmental Technologies’ net sales fell 11.6% to $320 million (below management’s expectations), as vehicle manufacturers suspended production in key markets. The segment’s net income was $35 million compared with $55 million in the prior-year quarter, impacted by lower volume.
Net sales in Life Sciences were up 6.2% to $258 million, which were in line with management’s expectations. The segment’s net income improved to $38 million from $31 million reported in the prior-year quarter, driven by higher sales volume and manufacturing performance optimization.
Other Details
Quarterly cost of sales increased 6.8% year over year to $1,830 million. Gross profit declined to $561 million from $1,099 million due to lower revenues and higher cost of sales. Core gross profit was $844 million compared with $1,139 million recorded in the prior-year quarter, with a respective margin of 33% and 40%. Operating loss was $121 million against an operating income of $420 million in the prior-year quarter.
Cash Flow & Liquidity
In the first quarter, Corning generated $248 million of net cash from operations against a cash utilization of $29 million in the year-ago quarter. As of Mar 31, the company had $2,025 million in cash and equivalents with $7,815 million of long-term debt.
Going Forward
Corning is affected by the global economic disruptions and health consequences caused by the pandemic. In the first quarter, the company took action to navigate through these unprecedented times and is planning to take further measures in the ongoing quarter.
Corning operates on a strong financial foundation, which positions it for long-term growth while adjusting to near-term conditions. As the company anticipates lower sales, it is adjusting its operating plan to reduce costs and capital spending.
Moreover, the company has no debt due over the next two years and it expects to maintain a strong cash balance as well as generate positive free cash flow for 2020. It plans to maintain dividends and pause share buybacks.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -44.53% due to these changes.
VGM Scores
Currently, Corning has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 this revision indicates a downward shift. It's no surprise Corning has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.