VALUATION HIGHLIGHTS
- Optical Communications constitute 53% of the Trefis price estimate for Corning's stock.
- Environmental Technologies constitute 14% of the Trefis price estimate for Corning's stock.
- Specialty Materials constitute 13% of the Trefis price estimate for Corning's stock.
WHAT HAS CHANGED?
- GLW Stock vs. S&P 500 Performance
The changes in GLW stock over the recent years have been far from consistent. Returns for the stock were 6% in 2021, -12% in 2022, -1% in 2023, and 61% in 2024. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, 24% in 2023, and 23% in 2024 — indicating that GLW underperformed the S&P in 2021 and 2023
- Q4 2024 Earnings
Corning posted strong results in Q4 2024. The company reported core sales of $3.9 billion (up 18% y-o-y). While display technologies sales were up 12%, optical communications sales surged 51%. Looking at the bottom line, the company's adjusted EPS stood at $0.57, compared to $0.39 in the prior-year quarter.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
Below are key drivers of Corning's divisions that present opportunities for upside or downside to the current Trefis price estimate for Corning:
Corning's Optical Communications Sales Growth: Recent volatility in Corning's Optical Communications revenues is attributed to competitive pressures and macroeconomic conditions. The revenue was $4.7 billion in 2024, and we project a gradual rise to over $9 billion by the end of our review period in 2031.
Should rising demand for AI and data center products push Optical Communications revenues beyond $14 billion, this could create a 30% upside to our current price target.
Corning's three smaller segments are experiencing growth rates that exceed the broader industry averages due to several factors:
- The Environmental Technologies segment is benefiting from the adoption of Corning's innovative gasoline particulate filter (GPF) technology.
- The Specialty Materials segment's growth is being propelled by the increasing use of its industry-leading cover glass innovations.
- The Life Sciences business is capitalizing on a strengthening market driven by new applications, particularly in expanding areas like cell culture and gene therapy.
BUSINESS SUMMARY
Corning Incorporated is a global leader in materials science, with a focus on innovative technologies. The company operates through several key business segments, supported by its manufacturing and processing capabilities across the globe. As of recent reports, Corning has operations in over 12 countries. While the provided text mentions Samsung Corning and Dow Corning as primary income sources, it's important to note that Dow Corning is now wholly owned by Dow, and Corning's relationship with Samsung in the display glass sector has evolved. Currently, Corning's main business segments include Optical Communications, Display Technologies, Specialty Materials, Environmental Technologies, Life Sciences, and Pharmaceutical Technologies. These segments drive Corning's revenue through the development, manufacturing, and sale of a diverse range of advanced technology products.
KEY TRENDS
Display glass prices
The market for display glass is influenced by supply and demand dynamics, characteristic of a commoditized industry. Historically, advancements in display glass technology coupled with manufacturing overcapacity exerted downward pressure on pricing. However, recent trends indicate a more stable pricing environment, influenced by factors such as panel maker utilization and demand.
Growth in consumer demand for television in emerging markets
Emerging markets and developing nations continue to present significant growth opportunities due to relatively low penetration rates of notebooks, tablet PCs, and televisions. The increasing disposable income and evolving consumer preferences in these regions are expected to fuel a rise in demand for these devices, consequently driving growth in global glass shipments.
Demand for large-sized displays
Consumer preference for larger screen sizes across various devices, including TVs, notebooks, tablets, and mobile phones, remains a key driver in the display market. This preference enhances the viewing experience and is expected to sustain demand for larger television glass, leading to increased shipments. Furthermore, the adoption of advanced display technologies like Ultra HD (4K and 8K) on larger screens further amplifies this demand by offering superior visual quality.
High replacement rate for consumer electronics in developed markets
Developed markets exhibit a consistent demand for new tablets, notebook PCs, and televisions due to relatively high replacement cycles. This ongoing replacement demand generates a continuous need for new display panels, thereby contributing to the overall volume of global shipments.
Strategic investment in research and development for competitive edge
Corning has historically maintained its competitive advantages in the glass substrate market through substantial and continuous investment in research and development. This commitment to innovation allows Corning to stay at the forefront of technology, although such investments can contribute to higher operational costs in the short term.
Increasingly stringent emission standards driving demand for advanced filtration solutions
Automobile manufacturers worldwide are increasingly required to meet more stringent emission standards. To comply with these regulations, they rely on advanced emission control systems. As environmental standards become even more rigorous, the need for newer and more effective emission control technologies escalates. This trend positively impacts the market for automotive exhaust systems, benefiting manufacturers like Corning who supply critical components such as automotive substrates and filters.
