Corning Incorporated GLW is scheduled to report first-quarter 2020 results on Apr 28, before the opening bell. In the last reported quarter, the company delivered a positive earnings surprise of 4.6%. Notably, the company has a trailing four-quarter positive earnings surprise of 4.9%, on average.
The specialty glass maker is expected to have recorded lower aggregate revenues on a year-over-year basis. It has been facing headwinds in two business segments, Optical Communications and Display Technologies.
Let’s discuss the factors that are likely to get reflected in the upcoming quarterly announcement.
Factors at Play
In Optical Communications, Corning expects first-quarter 2020 sales to be down almost 25% year over year due to overall market weakness stemming from customers’ project spending decisions, primarily in carrier networks. In Display Technologies, lower glass volume and prices are likely to have had a negative impact on the company’s growth profile.
During the quarter under review, Corning collaborated with LG Electronics Vehicle Component Solutions to industrialize Corning ColdForm Technology for curved automotive interior display systems. Backed by consumer demand for more in-car infotainment and connectivity, ColdForm Technology enables larger and more integrated displays designs. To enhance technology adoption, Corning partnered with Visteon, a global leader in automotive cockpit electronics technology including digital multi-display modules. These factors are likely to have made an impact on the company’s first-quarter performance.
Corning joined forces with Qualcomm Technologies to develop 5G mmWave infrastructure systems for enterprises and public venues. The 5G systems are designed to combine Qualcomm’s 5G and mmWave technology leadership with Corning’s small-cell expertise to deliver affordable and easy-to-install 5G-ready networks indoors.
Corning and Infinera delivered 800 gigabits per second (800G) single wavelength with Infinera’s sixth-generation Infinite Capacity Engine technology across 800 kilometers on Corning’s TXF optical fiber. The success demonstrated the benefits of a coherent 800G solution with superior fiber designed to meet growing bandwidth demands for network operators from metro to subsea network applications. Corning’s performance is expected to have benefited from these positives.
That said, the Zacks Consensus Estimate for net sales in the Optical Communications segment, which accounts for the lion’s share of total revenues, is pegged at $793 million. The projected figure indicates a decline of 25.5% from the year-ago quarter’s reported figure. Net sales in Display Technologies are anticipated to be $745 million, which suggests a drop of 8.9% from the prior-year quarter’s recorded figure.
Net sales in Specialty Materials are estimated to be $329 million, which indicates an increase of 6.5% from the year-ago quarter’s reported figure. The performance is likely to be supported by innovations and strong demand for premium glasses. Net sales in Environmental Technologies are expected to be $385 million, which calls for a rise of 6.4% from the year-ago quarter’s reported figure, driven by gasoline particulate filter (GPF) adoption. Net sales in Life Sciences are projected at $256 million, which suggests a rise from $243 million reported in the prior-year quarter.
For the March quarter, the Zacks Consensus Estimate for total revenues is pegged at $2,486 million that indicates a fall of 12.8% from the year-ago quarter’s reported figure. Adjusted earnings per share are pegged at 16 cents, which calls for a decline of 60% from the prior-year quarter’s recorded figure.
What Our Model Says
Our proven model doesn’t predict an earnings beat for Corning this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Corning’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -1.90%.
Corning Incorporated Price and EPS Surprise
Corning Incorporated price-eps-surprise | Corning Incorporated Quote
Zacks Rank: Corning currently has a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
DexCom, Inc. DXCM is slated to release quarterly results on Apr 28. It has an Earnings ESP of +143.90% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Yum China Holdings, Inc. YUMC is scheduled to release results on Apr 28. The company has an Earnings ESP of +18.37% and carries a Zacks Rank #2.
Chemed Corporation CHE has an Earnings ESP of +0.42% and carries a Zacks Rank of 2. The company is set to report results on Apr 28.
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