Corning Incorporated (GLW) in New York City is a leading materials science technology and innovation company with more than 170 years of experience. It operates through five segments: Display Technologies; Optical Communications; Specialty Materials; Environmental Technologies; and Life Sciences.
In April, the company announced its latest quarterly dividend of $0.27 per share, payable on June 29. Earlier, in February, GLW raised its quarterly dividend payout by 12.5% to $.027. It currently pays $1.08 annually, yielding 2.96% on its current share price. The company’s dividend payouts have risen at a 12% CAGR over the past five years. In addition, GLW’s 2.56% four-year average dividend yield is significantly higher than the 1.47% industry average.
Given surging market volatility and gyrating market trends, investors have been focusing on quality dividend stocks to hedge their portfolios against the market’s risks. GLW’s robust dividend payout history has allowed the stock to outperform the benchmark indexes over the past month. The stock has gained 3.5% in price over the past month and 3.9% over the past five days.
Here is what could shape GLW’s performance in the near term:
Bullish Growth Prospects
Analysts expect GLW’s revenues and EPS to increase 8.5% and 7%, respectively, year-over-year to $3.80 billion and $0.57 in its fiscal second quarter (ending June 30, 2022). In addition, the Street expects the company’s revenues to rise 8.3% year-over-year to $3.94 billion in its fiscal third quarter. Its EPS is expected to improve 9.6% from the same period last year to $0.61 in the next quarter.
GLW’s annual revenue is expected to rise 9.1% year-over-year in the current year and 4.8% year-over-year next year. The company’s EPS is expected to increase 13.7% from its year-ago value in fiscal 2022 and 12.2% year-over-year in its fiscal 2023.
Discounted Valuation
In terms of forward non-GAAP P/E, GLW is currently trading at 15.51x, which is 18.5% lower than the 19.02 industry average. Its 2.00 forward Price/Sales multiple is 32.2% lower than the 2.95 industry average. Also, the stock’s 8.19 forward EV/EBITDA ratio is 35% lower than the 12.59 industry average, while its 2.45 forward Price/Book multiple is 39.3% lower than the 4.03 industry average.
In addition, GLW is currently trading at 9.59x its forward cash flow, which is 48% lower than the 18.42x industry average. Furthermore, the stock’s 2.33 forward EV/Sales ratio is 18% lower than the 2.84 industry average.
Consensus Rating and Price Target Indicate Potential Upside
Among the seven Wall Street analysts that rated GLW, four rated it Buy, while three rated it Hold. The 12-month median price target of $42.86 indicates a 17.4% potential upside from yesterday’s closing price of $36.51. The price targets range from a low of $37.00 to a high of $50.00.
POWR Ratings Reflect Rosy Prospects
GLW has an overall B rating, which translates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
GLW has a B grade for Growth and Quality. The company’s revenues have risen at a 7.7% CAGR over the past three years, justifying the Growth grade. In addition, GLW’s 13.05% trailing-12-month net income margin is 139.6% higher than the 5.44% industry average, which is in sync with the Quality grade.
Among the 36 stocks in the A-rated Industrial – Manufacturing group, GLW is ranked #12.
Beyond what I have stated above, view GLW Ratings for Momentum, Sentiment, Stability, and Value here.
Click here to check out our Industrial Sector Report for 2022
Bottom Line
GLW’s management expects its profitability to grow faster than its sales in fiscal 2022. Its EPS is expected to grow up to a few percentage points higher than sales, thanks to its cohesive portfolio and “More Corning” strategy. This should allow GLW to increase its dividend payouts in the coming quarters. Thus, we think GLW could be an ideal investment bet for fixed-income investors.
How Does Corning Incorporated (GLW) Stack Up Against its Peers?
While GLW has a B rating in our proprietary rating system, one might want to consider looking at its industry peers, Vishay Precision Group, Inc. (VPG), Core Molding Technologies Inc (CMT), and Mueller Industries, Inc. (MLI), which have an A (Strong Buy) rating.
GLW shares were trading at $36.13 per share on Friday morning, down $0.38 (-1.04%). Year-to-date, GLW has declined -1.55%, versus a -12.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
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