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Corning (GLW) Beats on Q2 Earnings, Expects Growth to Continue

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Corning Incorporated GLW reported solid second-quarter 2021 results, wherein both the bottom line and the top line beat the respective Zacks Consensus Estimate.

Bottom Line

On a GAAP basis, net loss in the June quarter was $354 million or loss of 42 cents per share compared with a net loss of $96 million or loss of 13 cents per share in the prior-year quarter.

Core net income came in at $459 million or 53 cents per share compared with $218 million or 25 cents per share in the year-ago quarter. The improvement was driven by higher sales and expanded margins. The bottom line beat the Zacks Consensus Estimate by 2 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 36.7% year over year to $3,501 million, driven by strong sales growth at all five business segments. Core sales grew to $3,504 million from $2,588 million. The top line surpassed the consensus estimate of $3,403 million.

Segment Results

Net sales in Optical Communications increased 21.2% year over year to $1,075 million. Sales grew in both enterprise and carrier networks, driven by 5G, fiber-to-the-home and cloud computing projects. The segment’s net income was $148 million compared with $81 million in the prior-year quarter.

Net sales in Display Technologies were $939 million compared with $753 million in the prior-year quarter, led by an increase in glass substrate prices. The segment’s net income was $248 million compared with $152 million in the year-ago quarter.

Specialty Materials’ net sales were up 15.8% year over year to $483 million. The rise was driven by strong demand for premium cover materials, strength in the IT market and greater optical content in semiconductor manufacturing. The segment’s net income was $81 million compared with $90 million a year ago.

Environmental Technologies’ net sales jumped 80.1% year over year to $407 million, resulting from improving markets and more Corning content. Under this, automotive sales were up 68% as vehicle production improved from pandemic lows and gasoline particulate filter adoption continued in Europe and China. Diesel sales grew 101% year over year, driven by adoption of advanced exhaust after-treatment systems in preparation for China VI implementation as well as strength in the North America heavy-duty truck market. The segment’s net income was $81 million.

Net sales in Life Sciences were up 28.4% year over year to $312 million. The performance was driven by recovery in academic and pharmaceutical research labs and strong demand for bioproduction products and diagnostic-related consumables. The segment’s net income improved to $52 million from $31 million reported a year ago.

Other Details

Cost of sales increased 21.1% year over year to $2,186 million. Gross profit improved to $1,315 million from $756 million. Core gross profit was $1,326 million compared with $863 million in the prior-year quarter, with respective margins of 37.8% and 33.3%. Operating income was $575 million, which improved from a loss of $103 million.

Cash Flow & Liquidity

During the first half of 2021, Corning generated $1,494 million of net cash from operating activities compared with $798 million in the prior-year period. Free cash flow improved to $843 million from a negative $34 million.

As of Jun 30, 2021, the company had $2,320 million in cash and cash equivalents with $7,025 million of long-term debt.

Q3 Outlook

Corning anticipates strong demand and positive momentum across its businesses to continue. For the third quarter, it expects core sales in the range of $3.5 billion to $3.7 billion. Core earnings per share are estimated between 54 cents and 59 cents.

Zacks Rank & Stocks to Consider

Corning currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader sector are 360 DigiTech, Inc. QFIN, Blucora, Inc. BCOR and Seagate Technology Holdings plc STX, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

360 DigiTech delivered a trailing four-quarter earnings surprise of 42.2%, on average.

Blucora pulled off a trailing four-quarter earnings surprise of 3.8%, on average.

Seagate delivered a trailing four-quarter earnings surprise of 11.4%, on average.


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