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In December 2018, Corning Incorporated (NYSE:GLW) released its most recent earnings announcement, which confirmed that the company turned profitable again after experiencing negative earnings in the last financial year. Investors may find it useful to understand how market analysts predict Corning’s earnings growth trajectory over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ outlook for next year seems buoyant, with earnings increasing by a significant 80%. This high growth in earnings is expected to continue, bringing the bottom line up to US$2.2b by 2022.
Although it is helpful to be aware of the rate of growth year by year relative to today’s value, it may be more valuable to estimate the rate at which the business is growing on average every year. The benefit of this method is that we can get a bigger picture of the direction of Corning’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 25%. This means that, we can assume Corning will grow its earnings by 25% every year for the next few years.
For Corning, I’ve put together three fundamental factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is GLW worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether GLW is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GLW? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.