It's been a busy few months since Corning (NYSE: GLW) released its first-quarter results on April 30. After the glass technologist reduced its full-year guidance (due largely to a shift in the timing of a single large optical deployment), its share price fell, and kept falling for the next month. But it rebounded in June and recovered most of that loss after the company used its annual Investor Day to unveil its new "Strategy and Growth Framework" for the 2020 through 2023 period.
With its second-quarter report slated for July 30, let's consider the key areas investors should be watching when it hits the wires.
On Corning's headline numbers
As a reminder, Corning does not issue specific quarterly revenue or earnings guidance. However, during the Q1 earnings conference call, management did suggest core sales should increase in the high-single-digit percentage range in Q2, with operating margins expanding roughly 75 basis points and earnings per share rising in the mid-teens range.
While we don't usually pay close attention to Wall Street's forecasts, most analysts haven't deviated much from those guidance ranges. The consensus estimates currently predict Corning's revenue will climb 8.1% year over year to $2.98 billion, translating to a 15.8% increase in earnings per share to $0.44.
IMAGE SOURCE: CORNING
Breaking it down
Beyond the top-level figures, investors should pay close attention to how Corning's various business segments are performing.
Management had predicted that demand for data-center fiber and cables was going to drive high-single-digit percent growth for Corning's largest segment, Optical Communications. But we should also be keeping an eye out for updates on that delayed optical deployment by what management described as a "major fiber-to-the-home customer" -- and which required a $100 million adjustment. -- as well as any other rollout delays, especially in light of the current uncertain macroeconomic environment.
Meanwhile, Corning said its second-largest segment, Display Technologies, should deliver an increase in volumes that's "significantly" higher than the mid-single-digit growth the broader display glass market is seeing, namely thanks to the ramp up of production at its new Gen 10.5 facility. At the same time, Corning's primary goal now is to generate stable returns from the display segment, as the actual revenue growth stemming from those higher volumes will be partly muted by the industry's steadily moderating glass-price declines.
Within the Environmental Technologies segment, the company's new framework set out plans to double automotive sales with the help of new automotive glass, and emissions standards supporting its gasoline particulate filter products. In the meantime, segment sales should increase around 10% for Q2.
Management foresaw its Specialty Materials sales rising in the high-single-digit range in Q2, thanks to increased adoption of mobile electronics products like Gorilla Glass. And last but not least, Corning's smaller Life Sciences segment was expected to grow revenues in the low- to mid-single-digit range -- though management has suggested this growth could drastically accelerate over the longer term (to at least twice the rate of the broader industry) thanks to demand for laboratory products to support new cell- and gene-therapy solutions.
Corning has not provided specific full-year revenue or earnings guidance. But on a broad basis, management most recently reiterated their expectation for consolidated core sales and earnings per share to increase through the end of 2019, and set goals for compound annual sales growth in the 6% to 8% range and EPS growth in the 12% to 15% range in the starting next year.
Unless this report contains any negative surprises echoing last quarter's optical delays, I suspect those targets haven't changed much over the past month or so since Corning announced its new growth framework. But you can rest assured we'll touch base next week anyway to see how the company fared in Q2.
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