What you say is so true but keep politics off this board - there are other boards that you can go to for this.
The brilliant CFO is buying shares at the open. The SP pops a bit, then fades as the shares are sold. Corning is wasting cash trying to keep the sp afloat - to make up for #$%$ management who has no vision and very little ability to execute. Just cannot figure out how this management team isn't swept away.
its hypocrisy. They want immigrants for the vote. They care less about ISIS coming here. Even the CIA Director said they can't be vetted. So Dems are evil
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Lists of stocks with high dividend and buyback yields. GLW is #1
We calculated dividend plus buyback yields for the S&P 500, and then sorted the list so that it only included companies trading below the S&P 500’s current-year price-to-earnings ratio of 16.6 and the index’s price-to-book-value of 2.7, as calculated by FactSet. We excluded companies that pay no dividend at all.
GLW 2.67% yield + 20.88% of hares bought back in last year = 23.55%
despite that actual return was -4%
As a matter of fact, the top 10 companies all had negative returns from -2% (AIG) to -53% (Macy's), GLW was #2
Value play or trap?
the stock still falls below the market average - even on the day of a buy coverage initiation. How well is the management of this company thought of?
Citi initiates coverage on GLW and these are their first comments. Thank God, an analyst that understands. Add him to the list with Goldman Sachs Clark.
As for the other analyst, they don't understand. Who's fault is that-- Top Brass. For the love of all that's holy, somebody (C-suite) PLEASE SELL the BENEFITS of the display business and impact of increased screen related to glass volume.
“We believe sentiment in Display has turned too bearish into a seasonally stronger 2H, and note that screen size matters more than LCD TV unit volume,” analyst Stanley Kovler commented. He explained that a 1-inch variation in average LCD TV screen size equated to an impact of 7-9 cents on annual EPS, while a 1 percent change in LCD volumes impacted EPS by merely 1-2 cents.
I think price target of 25-27 is reasonable and achievable. Consider the following, a year ago GLW was at these levels ballpark price of $21. USD was 94 a year ago and at same levels today. JPY last year was 122.71 and now 104.16. The Yen has strengthened 15% from a year ago but GLW price has held.
The Yen has to go down. Japan can not maintain these levels of a strong Yen. Their dependence on exports is crucial to their economy. It's simply a matter time and whether the BOJ acts or the Japanese Finance Minister.
Amen. and again, thanks for pointing out the LCD, YEN and Hedge connection. I always thought Corning's biggest issue with the street was the declining and price disrupted LCD market, but their accounting seems to have added some fuel to the doubters fire. I still think a price target of 25-30 is more reasonable, but I'm a little less confident now.
I don't agree with his argument. I think it has too many holes, his track record on GLW is suspect, and his projections assume the current concerns (Display and Hedge) are constant and not dynamic for the foreseeable future (1yr). His call is based mainly on Display ( by default Hedge) and noted as a "dead cat bounce". It is partly on valuation be it PE, or PFCF being at high multiples comped to industry or historical levels. Lastly, it's his belief that the share holders returns (buybacks and dividends) have investors wearing blinders that obscure their periphery where other factors are influencing the stock price.
I will give him credit about blinders. It forced me to double back and take a closer look at the restructuring charges being written off in the past 5 years. It's assumed the restructuring is nearly complete now that DCJV is closed. He implies that is not the case. I beg to disagree. Will see who is right as future quarters and write offs are printed. This highlighted GLW past record with respect to revenue and eps. Revenue has always been shy on numerous or countless quarters dating back 4-5 years. EPS has been in line with estimates for same time period and occasional surprise 3-7% but rarely missed or a negative surprise. That's good, right? Yet during this time period (16-20 quarters) there has never been a monster or blow out surprise where GLW beats by 20-35%. You know core estimates of say $1.40 and the print is $1.75. That's because restructuring write offs had been dribbling out with respect to unrealized gains from the hedge. Normally, announce the bad news and write offs accepting the big hit and move forward. Let's hope the write offs are done or nearly complete.
bubba - thx again. The translation impact of currency changes on reported results is complicated enough and corning has the added factor of hedges. As you point out F/X swings will impact a lot of the P&L lines, but if the hedges are done properly the net cash flow shouldn't be effected FWIW, I wouldn't own corning based on its recent historical performance.
Management has said that FCF for investors will be $12.5B over the next 4 years (our share of the $26-$30B of total cash). $3B (avg, - should be higher as we approach 2019) with a 12 multiple is $36B. With 1.1B shares outstanding price becomes $33 per share. I just don't see how drex got to $14.50 unless they are convinced the capital allocation financial projections won't be achieved.
The lions share of all GLW hedging is on the YEN. Further, the lions share of the yen hedge is on display (consumer electronics being produced in asia). The hedge effects revenue, earnings, and cash flow. Everyone focuses on eps as primary metric but if the outstanding share count is changing (buyback) it could give a false impression. A rising eps may not have any "growth" it's simply going up because shares are going down. Free cash flow on the other is normally viewed as total $$ and price to FCF. The metric is not dependent on share count. PFCF for 2012-2015 had a range between 9-15 depending on the quarter and share price. On avg it was close to a 12-13 multiple. The last quarter with the GAAP loss reflecting impact from hedge the PFCF shot to a multiple of 31. The industry median is 13.4. So, GLW is ranked lower than 79% of it's peers based on PFCF multiple. The depressed JPY is impacting cash flow. The question is how long does it stay at these levels or lower. If the length is extended 2-4 Q then realized gains will be lower than same period comp from year earlier.
Checkout Corning website on their investor relations page. There's a tab Media Digital Disclosures. Presentation (PDF) schematic detailing the line items and impacts throughout the financial documents of 8K or 10K.
bubba - thanks for the reply. I only looked at 2 recent 8K's, but the yen didn't seem to have a big impact on core vs gaap net inc.
Unless there are large swings in the JPY, this wouldn't be a large impact on cash flow. Might wiggle their capital allocation forecast of generating $26-$30B of cash through 2019, by $1B, but not much change in terms of valuation.
If corning can perform financially and generate $30B in cash over the next 4 years, then Drexel's valuation of $16B ($14.50 per share times 1.1B outstanding shares) is more likely the absurd amount and not 16X 2016 EPS. As you point out, gaap earnings are currently being understated v Core.
You're right about LCD business and yes it is baked in to some degree. It comes down to understanding the hedge on the yen. The hedge was put in place in 2011 to protect against yen decline. I think it originally started at constant yen as 88, around 2012(3) it was adjusted to 93 and then again at the start of 2015 at 99. JPY is the symbol for (USD/YEN). JPY skyrocketed starting in Q4 2012 due to yen decline against dollar. It also moved in mid 2014.
The hedge paid off because the spread from 93 to 110 (JPY) and even higher (121 late 2014) both as realized gains and unrealized gains . When the JPY was moving higher '13-'14, Flaws put a collar (wrote and sold call options) on the lower side. This meant his overall costs were lowered. He was buying expensive puts and selling the calls to offset the cost of overall insurance.
Fast forward to 2015, starting 2015 GLW recognized constant YEN at 99 versus previous years of 93. The fall of 2014 (Q3, or Q4) Flaws took the collar (stopped selling call options) off the hedge leading into 2015. This meant the hedge was more costly but it also meant the risk was removed should YEN gain considerably. If the call options were still in place GLW would be paying considerably for the recent moves from 118 to 104.
Roughly 2011 thru 2015 GAAP was overstated v Core. The overstating was due largely to unrecognized gains. The realized gains helped but institutions were/are unwilling to pay extra for eps gains that are financial derivative versus operational EPS gains. This is why the stock traded sideways and gave ground to S&P. Also, why everyone on this board bemoans the past 5 years concerning growth v buybacks or general performance issues. During this time, GLW was (is) restructuring, the write offs (one offs as DB mentions) were significant. Why? they had the opportunity to write off losses with an inflated unrealized gain GAAP figure.
Currently, GAAP is understated v Core and has been since Q3-Q4 2015.
db - yep, cash on the balance sheet would cover about half of drex's $14.50 valuation. I would still like to see their math on how the $26-$30B of cash corning said it will generate over the next 4 years (2016-2019, in the June Bernstein conf presentation) only supports a $14.50 valuation. LCD market shrink has been an issue for years. It is recurring "bad news" at quarterly investor updates and is well baked in to the corning guidance and forecasts. Or does Drex have something that indicates management has entirely missed the impact on the financials?
His downgrade was issued when stock was trading at $21 levels. His EPS estimate for CY16 is $1.28 or below consensus of $1.36. So, $21/$1.28=16.40 multiple. That's his number and basis of argument.
Cash on hand including recent DCJV closing is $7.65 (my figures, could be off). So, your ex-cash forward pe based on $12.64 price. His estimate would be multiple of 10.45, the consensus multiple close to 9.3.
Lastly, the EPS numbers are core and not GAAP. So there needs to be consideration for the effect of the hedge impact.