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Corning (GLW) Beats on Q1 Earnings, Raises 2022 Sales View

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·5 min read
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Corning Incorporated GLW reported impressive first-quarter 2022 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate.

Net Income

On a GAAP basis, net income in the quarter was $581 million or 68 cents per share compared with $599 million or 67 cents per share in the prior-year quarter. Core net income increased to $465 million or 54 cents per share from $402 million or 45 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents.

Corning Incorporated Price, Consensus and EPS Surprise

Corning Incorporated Price, Consensus and EPS Surprise
Corning Incorporated Price, Consensus and EPS Surprise

Corning Incorporated price-consensus-eps-surprise-chart | Corning Incorporated Quote

Revenues

Quarterly GAAP net sales increased 11.9% year over year to $3,680 million, driven by strong growth in Optical Communications, Display Technologies and Hemlock’s solar materials. Core sales grew to $3,744 million from $3,263 million. The top line beat the consensus estimate of $3,563 million.

Segment Results

Net sales in Optical Communications increased 27.9% year over year to $1,198 million as network operators increased capital spending to address the demand for 5G, broadband and the cloud. The segment’s net income was $166 million compared with $111 million in the prior-year quarter.

Net sales in Display Technologies were $959 million compared with $863 million in the prior-year quarter, thanks to the favorable pricing. The segment’s net income was $236 million compared with $213 million in the year-ago quarter. The company expects glass prices to be up slightly sequentially in the second quarter.

Specialty Materials’ net sales were up 9.3% year over year to $493 million. The company is witnessing significant demand for its premium cover materials and Advanced Optics products, backed by strength in the IT, mobile device and semiconductor markets. The segment’s net income was $75 million compared with $91 million a year ago.

Environmental Technologies’ net sales declined 7.3% year over year to $409 million as component shortages limited automotive production. The segment’s net income was $74 million, stable year over year.

Net sales in Life Sciences were up 3.3% year over year to $310 million. The segment’s net income declined to $42 million from $48 million a year ago. The decline was due to COVID-related operational challenges in the first half of the quarter, which adversely impacted output.

In Hemlock and Emerging Growth Businesses, net sales increased 38.4% year over year to $375 million. This was primarily driven by increased sales of polysilicon. Demand for Hemlock’s solar materials grew while sales of semiconductor materials remained strong. Automotive Glass Solutions and Corning Pharmaceutical Technologies also contributed to growth. The segment’s net loss was $8 million compared with a net loss of $24 million a year ago.

Other Details

Cost of sales increased 12.3% year over year to $2,397 million. Gross profit improved to $1,283 million from $1,156 million. Core gross profit was $1,370 million compared with $1,167 million in the prior-year quarter, with respective margins of 36.6% and 35.8%. Operating income was $570 million compared with $502 million a year ago.

Cash Flow & Liquidity

During first-quarter 2022, Corning generated $534 million of cash from operating activities compared with $723 million in the year-ago quarter. Free cash flow decreased to $171 million from $372 million.

As of Mar 31, 2022, the company had $2,016 million in cash and cash equivalents with $6,839 million of long-term debt.

Outlook

Corning expects solid top-and bottom-line growth for 2022 while remaining focused on pricing, capital efficiency and cash generation. For the full year, management raised its expectations for sales to exceed $15 billion, with sales growing at a high-single-digit percentage and EPS growing up to a few percentage points faster than sales.

Zacks Rank & Stocks to Consider

Corning currently has a Zacks Rank #4 (Sell).

Gogo Inc. GOGO is a better-ranked stock in the broader Zacks Computer and Technology sector, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 25% over the past 60 days.

Gogo delivered a trailing four-quarter earnings surprise of 65%, on average. It has soared 80.5% in the past year.

Nokia NOK, carrying a Zacks Rank #2 (Buy), is another solid pick for investors. The consensus estimate for current-year earnings has been revised upward by 5% over the past 60 days.

Nokia pulled off a trailing four-quarter earnings surprise of 205.2%, on average. It has moved up 23.5% in the past year.

Sierra Wireless, Inc. SWIR carries a Zacks Rank #2. The consensus mark for current-year earnings has been revised upward by 237.5% over the past 60 days.

Sierra Wireless pulled off a trailing four-quarter earnings surprise of 58%, on average. The stock has returned 9.1% in the past year.


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