Corning (GLW, Financial) ended fiscal 2014 on a strong note with excellent results across all its key metrics such as revenue and earnings. A solid year-over-year increase in the metrics clearly shows that the company still has steam for growth. The integration of CPM was the key contributor to its growth story. Let's see why Corning can continue its good performance.
The way ahead for Corning
Corning is now focusing on various aspects to improve its profitability. It is seeing lot of opportunities arising in the Display segment. The glass market is improving at an impressive pace and with the ramp up in the use of high end smartphones and gadgets, the company is expecting healthy business in 2015.
This year, Corning is optimistic about the growth in the glass volume at retail as the glass supply is tight with the growing demands. In addition, Corning has also entered into new contracts with customers, including some of the leading vendors in the market. With this, Corning is thinking of a better ramp in the volume in 2015.
Growing end-market demand
Moving ahead, Corning is pleased to see growing demand in the TV retail market. The customers are continually shifting towards more usage of LCD and LED TV units with growth in the average size of the screen. The company is expecting this to drive the ultra-high definition sales to about 25 million units by 2015, which will contribute good revenue to Corning’s camp.
The coin has another side, too. Corning is seeing soft LCD glass market in the initial quarters of new fiscal year. The glass volume can remain flat ore towards a down trend. But the company is expecting good moderation in the glass volume by the third quarter of the new fiscal year. However, this should not worry Corning much as there are some positive points which are giving strength to Corning’s growth momentum. It is expecting to maintain a good inventory level with the growth in the retail demand. The weaker yen can also be a growth driver for the company. Besides this, the decline in the prices is also expected to affect its competitors. But Corning’s sound financial position will help it with a competitive advantage among its competitors as many of them can’t afford such a price decline.
Conclusion
With a trailing P/E of 13.72, the stock is dirt cheap, and the forward P/E of 14.21 shows good earnings growth in the near term. It seems to be a good pick as of now with an impressive profit margin of 25.45% which can attract many investors and help to gain market share. But in the next five years, the stock might be quite disappointing as its earnings are growing at a CAGR of just 10.85% as compared to industry average of 16.63%. Considering all these facts and statistics, I would like to suggest the investors that Corning is definitely a good pick as of now and the investors should give a good thought at including this in their portfolio.
