TLDR
- Corning (GLW) beat Q3 estimates with core EPS of $0.91 versus $0.88 expected, and core sales of $5.08 billion.
- The stock traded near $125 to $128 on Tuesday, down about 2% from Monday’s close of $127.74.
- Optical communications sales rose 44% to $2.38 billion, with Gen AI product sales up more than 100%.
- Q4 guidance calls for sales of $5.2 billion to $5.3 billion and core EPS of $0.96 to $1.00.
- The stock is down about 50% from its June 29 record close of $255.69, as investors worry about AI spending and a $2 billion capex plan.
Corning (GLW) stock traded around $125.54 on Tuesday morning, down 1.7% from Monday’s close of $127.74. Pre-market trading put it near $127.55 at one point, and one report showed it as low as $123.94. The move came even though the company beat Wall Street estimates for the third quarter.
Core earnings came in at $0.91 a share, up from $0.67 a year ago. Analysts expected $0.88. Core sales rose 19% to $5.08 billion, topping the $5.03 billion consensus.
The stock has had a rough run. It hit a record close of $255.69 on June 29 and has since lost about 50%. Its 52-week high is $271.78.
Optical Business Leads the Way
Optical communications is now Corning’s largest segment. It posted net sales of $2.38 billion, up 44% from a year ago and well above the $2.21 billion analysts expected. Net income in the segment jumped 80% to $532 million.
Enterprise network sales grew 84%. Generative AI product sales grew more than 100%. The carrier business added 4%, helped by data center interconnect demand.
Other optical names moved higher in pre-market trading. Ciena (CIEN) rose 1.2%, Coherent (COHR) gained 2.4%, and Lumentum (LITE) added 2.7%. Corning lagged its peers.
Margins improved too. Core gross margin rose 150 basis points to 40.5%. Core operating margin gained 310 basis points to 22.7%.
CEO Wendell Weeks called it “an outstanding third quarter.” Adjusted free cash flow came in at $661 million.
Other Segments Show Mixed Results
Not every business shared in the good news. Glass Innovations sales fell 3% to $1.51 billion, and net income dropped 10%. Weak memory prices hurt demand for TVs, handhelds and notebooks.
Automotive sales rose 4% to $470 million. Solar sales jumped 37% to $436 million, though the unit still lost $7 million. Life Sciences and emerging businesses grew 1% with a $28 million loss.
Corning plans price adjustments for display glass starting in the fourth quarter. It cited a weaker yen and higher costs for materials and energy.
Guidance and Spending Plans
For the fourth quarter, Corning expects core sales of $5.2 billion to $5.3 billion. Core EPS is guided to $0.96 to $1.00. Wall Street was looking for $0.93 on $5.2 billion in sales.
Full-year capital spending is expected to be about $2 billion. That figure is a big part of why investors are cautious. The AI trade has cooled on worries about the cost and debt tied to the buildout.
CFO Ed Schlesinger said Corning expects earnings to grow faster than sales. He pointed to long-term customer agreements that share the cost and risk of new capacity. “We have steadily added capacity,” he said.
The company’s “Springboard” plan is running ahead of schedule. Its annualized sales run rate hit $20.3 billion, above the $20 billion year-end target. Targets remain at $30 billion by 2028 and $40 billion by 2030.
Year-to-date free cash flow stands at $2.3 billion. Corning trades at a P/E of 59, with a PEG ratio of 0.44. “We expect our outstanding performance to continue,” Schlesinger said.
On Tuesday, Corning shares were last quoted at $125.54, down $2.20.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
