Will Top-Line Decline Dent Corning's (GLW) Q3 Earnings?
Corning Incorporated GLW is set to report its third-quarter 2023 results on Oct 24, before the opening bell. It delivered a trailing four-quarter earnings surprise of 2.99% on average. In the last reported quarter, the communication components provider matched the Zacks Consensus Estimate of 45 cents.
The advanced glass substrates producer is expected to report a top-line contraction year over year, owing to demand softness in several end markets. Supply chain issues and inflationary pressure remain headwinds. However, management’s efforts to boost profitability are tailwinds.
Factors at Play
During the third quarter, Corning extended its pharmaceutical glass-packaging portfolio by introducing Corning Viridian Vials. This innovative technology combines performance and sustainability and enables pharmaceutical manufacturers to efficiently match the growing demand for injectable medicines while reducing environmental impact. It improves filling-line efficiency by up to 50% and lowers vial-manufacturing carbon dioxide equivalent emissions by up to 30%.
One of the key environmental benefits of Viridian Vials is the reduction in glass material usage. Compared to conventional glass vials, Viridian Vials uses 20% less glass material without compromising quality or safety. Corning has collaborated with West Pharmaceutical Services as the exclusive distributor of Viridian Vial technology. These developments are likely to have supported the top line during the third quarter.
Management’s strong emphasis on improving profitability and cash flow generation are positive factors. However, weakness in several end markets is likely to have had a negative impact on Corning’s net sales during the third quarter. The lack of end market diversification and customer concentration in the display market is a major concern. This makes the business more vulnerable to competitive threats, as any shift in consumer preference or demand fluctuations can severely affect business performance. The persistence of economic uncertainty and its impact on consumer demand and infrastructure spending is another major concern.
Our estimate for revenues from the Optical Communications vertical is pegged at $1,028 million. For the Display Technologies segment, our estimate for revenues stands at $1,025.9 million. Our estimate for revenues from the Specialty Materials and Environmental Technologies is pegged at $467.7 million and $400.6 million, respectively.
For the September quarter, the Zacks Consensus Estimate for revenues is pegged at $3,538 million, indicating a decline from the year-ago quarter’s figure of $3,666 million. The consensus estimate for adjusted earnings per share is pegged at 47 cents, suggesting a decrease from the year-ago quarter’s tally of 51 cents.
Earnings Whispers
Our proven model does not conclusively 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 chances of an earnings beat. That is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -1.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Corning Incorporated Price and EPS Surprise
Corning Incorporated price-eps-surprise | Corning Incorporated Quote
Zacks Rank: Corning has a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Alphabet Inc. GOOGL is set to release its quarterly numbers on Oct 24. It has an Earnings ESP of +8.04% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Motorola Solutions, Inc. MSI has an Earnings ESP of +3.58% and carries a Zacks Rank of 3. The company is set to report quarterly numbers on Nov 2.
Pinterest PINS has an Earnings ESP of +4.76% and has a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Oct 30.
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