Corning Stock is a Technology Value Play
Glass and optical technology products producer Corning (NYSE: GLW) stock has exploded higher on its Q4 2022 earning shrugging off the selling in the benchmark indexes.
Glass and optical technology products producer Corning (NYSE: GLW) stock has exploded higher on its Q4 2022 earning shrugging off the selling in the benchmark indexes. The Company has been a benefactor for COVID vaccinations as its Valor glass for the vials helps push its Life Sciences sales to grow 21% in 2021. Corning manufactures its glass and materials substrates at 122 plants throughout 15 countries. From glass and plastic labware, Gorilla Glass to flat panel liquid crystal displays, ceramics, and mission-critical optical network components, Corning is a diversified technology and industrials play still trading at 18X forward earnings. While the automotive segment saw weakness due to the supply chain disruptions leading to the global chip shortage, it should rebound as more fabs come online. The Company continues to benefit from the growth in 5G, cloud, and network communications as it provides the materials essential for data transfers and optical fiber infrastructure. Prudent investors can watch for opportunistic pullbacks.
Q4 2021 Earnings Release
On Jan. 26, 2022, Corning released fiscal Q4 2021 results for the quarter ending in December 2020. The Company reported earnings per share (EPS) of $0.54 excluding non-recurring items, beating consensus analyst estimates of $0.52, by $0.02. Revenues grew 11.6% year-over-year (YoY) to $3.71 billion, beating analyst estimates for $3.59 billion. Gross margins were 36.5%.
Corning raised its guidance for fiscal Q1 2022 with EPS estimates between $0.48 to $0.53 versus consensus analyst estimates of $0.48. The Company estimates Q1 2021 revenues to come n between $3.5 billion to $3.7 billion compared to consensus analyst estimates for $3.44 billion. The Company sees fiscal full-year 2022 revenues to come in around $15 billion versus $14.66 billion consensus analyst estimates.
Conference Call Takeaways
Corning CEO Wendell Weeks stated the Company expanded its operating margin by 230 bp, while increasing its dividend by 9% and reducing its outstanding shares by 5% through its share buyback programs. Gross margins are expected to improve in 2022 with sales growth. The demand for its display segment was exceptionally strong during the holiday season and he expects a tight to balanced glass supply in 2022. Optical Communications sales have returned to growth as evidenced by the 22% YoY growth. CEO Weeks explained, "Operators are expanding network capacity, capability, and access. The pace of data center construction is accelerating as more applications move to the cloud and data creation continues to soar and fiber-rich wireless deployments are underway. Meanwhile, governments around the world are initiating plans to extend the reach of broadband to more people in more places as network access is increasingly viewed as a human right. For example, the recently passed U.S. Infrastructure bill allocates $65 billion in new spending for broadband infrastructure, including $42 billion for new network builds. Our customers are stating their preferences for fiber to build these networks. As the only large-scale end-to-end manufacturer of optical solutions, Corning plays a vital role in driving the continued expansion of connectivity. We are working even more closely with industry players at the regional and national levels, including expanding our long-time collaboration with AT&T." CEO Wendell claims it's only the beginning stages of major wave growth in passive optical networks which should help drive growth for many years to come.
GLW Opportunistic Pullback Levels
Using the rifle charts on weekly and daily time frames provides a precision view of the landscape for GLW stock. The weekly rifle chart peaked at the $46.88 Fibonacci (fib) level. Shares exploded on strong earnings gapping over the $38.84 fib and grinding higher. The weekly rifle chart breakout is still catching up with the 5-period moving average (MA) at 38.99 as shares hold above the 50-period MA at $40.23. The weekly upper Bollinger Bands (BBs) sit at $42.52. The weekly stochastic has a pretzel mini pup rising to the 60-band. The daily rifle chart uptrend has a slowing 5-period MA at $42.46 followed by the 15-period MA at $38.98 as the stochastic stalls at the 96-band. The daily market structure low (MSL) buy triggered above $35.57 before it gapped on earnings. The daily upper BBs continue to rise at $45.96. It's worth noting the daily 200-period MA sits at $39.73. Opportunistic pullback levels sit at the $40.58 fib, $38.84 fib, $37.32 fib, $35.50 fib, $32.96 fib, and the $31.61 fib level. Upside trajectories range from the $49.99 fib level up towards the $59.92 fib level.
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