Corning (GLW) Showing Signs Of Being A Roof Leaker

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Corning ( GLW) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Corning as such a stock due to the following factors:

  • GLW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $130.8 million.
  • GLW has traded 814,248 shares today.
  • GLW is trading at 2.93 times the normal volume for the stock at this time of day.
  • GLW crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on GLW:

Corning Incorporated manufactures and sells specialty glasses, ceramics, and related materials worldwide. The company operates through five segments: Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials, and Life Sciences. The stock currently has a dividend yield of 2%. GLW has a PE ratio of 22.7. Currently there are 6 analysts that rate Corning a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Corning has been 7.3 million shares per day over the past 30 days. Corning has a market cap of $26.3 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.71 and a short float of 1.8% with 3.31 days to cover. Shares are up 13.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Corning as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance 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 ratings report include:
  • The revenue growth came in higher than the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 25.2%. 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 0.17 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 3.46, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 88.10% to $743.00 million when compared to the same quarter last year. In addition, CORNING INC has also vastly surpassed the industry average cash flow growth rate of -20.60%.
  • Compared to its closing price of one year ago, GLW's share price has jumped by 38.14%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • CORNING INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CORNING INC increased its bottom line by earning $1.34 versus $1.07 in the prior year. This year, the market expects an improvement in earnings ($1.46 versus $1.34).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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