Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Corning Incorporated GLW stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Corning Incorporated has a trailing twelve months PE ratio of 18.2, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.6. If we focus on the long-term PE trend, Corning Incorporated’s current PE level puts it above its midpoint of 15.1 over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE compares favorably with the Zacks Computer & Technology sector’s trailing twelve months PE ratio, which stands at 22.7. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Corning Incorporated’s forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Corning Incorporated has a P/S ratio of about 3.2. This is almost in line with the S&P 500 average. Also, as we can see in the chart below, this stand slightly below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Corning Incorporated currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Corning Incorporated a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio (another great indicator of value) for Corning Incorporated is 10.1, a level that is lower than the industry average of 13.1. Clearly, GLW is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Corning Incorporated might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of f and a Momentum Score of b. This gives GLW a Zacks VGM score — or its overarching fundamental grade — of D. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen four estimates go higher in the past thirty days compared to one downward revision, while the full year estimate has seen five upward and no downward revisions in the same time period.
This has had a mixed impact on the consensus estimate as the current quarter consensus estimate has dropped by 4.1% in the past month, while the full year estimate has inched higher by 1.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Corning Incorporated Price and Consensus
Corning Incorporated Price and Consensus | Corning Incorporated Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Corning Incorporated is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #3, the stock belongs to an industry which is ranked among the Top 32%, which indicates that broader factors are favorable for the company. Over the past two years, the industry’s performance has surpassed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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