Is Corning's (GLW) Q1 Earnings Likely to Surprise Estimates? - Analyst Blog
Corning GLW is set to report first-quarter 2014 results on Jan 28. Last quarter, the company posted 18.4% positive earnings surprise. Let’s see how things are shaping up for this announcement.
Factors at Play
Corning’s fourth-quarter earnings of 45 cents beat the Zacks Consensus Estimate of 38 cents, driven by consolidation of CPM and a slightly lower tax rate, with record sales in most of its segments.
Revenues were up 5.4% sequentially and 19.9% year over yearon the back of strong demand across all its major product lines and markets.
Gross margins were up 519 basis points (bps) sequentially to 48.3%. Also, operating margins expanded 129 bps sequentially and 816 bps year over year.
Going forward, according to Corning, the TV market would remain strong through 2018, with average screen sizes continuing to increase. Though the first and second quarters are seasonally slower for the glass business, Corning’s sales are likely to grow from the respective year-ago quarters. Also, price declines are expected to moderate in the first quarter.
Earnings Whispers
Our proven model does not conclusively show that Corning is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 33 cents. Hence, the difference is 0.00%.
Zacks Rank: Corning has a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
You may consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:
Valeant Pharmaceuticals International, Inc. VRX, with an Earnings ESP of +0.43% and a Zacks Rank #1 (Strong Buy)Gentherm Inc. THRM, with an Earnings ESP of +2.0% and a Zacks Rank #1Popular, Inc. BPOP, with an Earnings ESP of +20.0% and a Zacks Rank #1
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