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TheStreet Open House

Why Corning (GLW) Is Down Today

NEW YORK (TheStreet) -- Corning (GLW) fell 7.4% to $16.90 on Tuesday despite fourth-quarter earnings and revenue from the glass maker that topped Wall Street estimates.

Corning reported earnings of 29 cents a share, beating the Capital IQ Consensus Estimate of 27 cents. Revenue fell 2% from the year-ago quarter to $2 billion, though it still beat the consensus of $1.93 billion.

Corning's core gross margins decreased 2 percentage points to 40% in the fourth quarter. The decline was due to lower volumes of its Gorilla Glass and a weaker sales mix in the Optical Communications segment, the company said.

Corning said it expects another year of growth for the LCD glass market in 2014, and expects Gorilla Glass volume to increase on a yearly basis in the first quarter. The company will provide full details for its 2014 outlook at its annual investors meeting on Feb. 7.

TheStreet Ratings team rates CORNING INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about its recommendation:

"We rate CORNING INC (GLW) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, GLW's share price has jumped by 55.19%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GLW should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • GLW's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.33, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for CORNING INC is rather high; currently it is at 55.20%. Regardless of GLW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GLW's net profit margin of 19.73% significantly outperformed against the industry.
  • CORNING INC's earnings per share declined by 22.2% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CORNING INC reported lower earnings of $1.16 versus $1.76 in the prior year. This year, the market expects an improvement in earnings ($1.22 versus $1.16).

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