Corning (GLW, Financial) has performed consistently well in the past 12 months. Its top and bottom line rose 29% and 24% respectively for fiscal year 2014. The main driver for its earnings growth was the integration CPM and Korea. Also, its non-display segment remained quite profitable for the company throughout the year. GLW added more than $100 million from synergies of its product portfolio from multiple businesses. These businesses demonstrate great prospects for Corning in the long run.
Corning sees great opportunities attached with its synergy from CPM, optical communication, environmental LCD Glass and Display segment. These segments look fairly progressive and should drive its growth in 2015 and beyond. Moreover, its cost-reduction efforts have been outstanding in almost all the departments of its businesses. The continual innovation in products with better technology is helping the company to reduce its manufacturing costs. These pains should assist the company to improve its profitability and yield higher returns to shareholders going forward.
LCD and new Gorilla Glass 4 are catalysts …
Corning sees pretty good momentum going for its LCD glass entering into the first-quarter 2015. It is witnessing great demand for LCD glass in the markets. The company particularly sees great demand for larger televisions in retail, which are driving its volume and supply. It’s Gorilla Glass 3 and 4 are turning out to be great catalysts for revenue generation. Corning launched Gorilla Glass 4 during the fourth quarter of 2014. It received great reviews from customers for this glass at the recent Consumer Electronics show.
Gorilla Glass for use in new product launches is accelerating speciality material sales. Corning continues to see great volume for its Gorilla Glass from device manufacturer. The company noticed around 20% growth in Gorilla Glass volume. This volume growth in turn is driving sales for its Advanced Optic, which is embedded in Speciality. Also, the retail demand for Gorilla Glass has been quite positive for touch devices across the world. The company expect the Gorilla Glass 4 to drive growth for its Speciality materials with a better price in 2015.
Its speciality material sales are expected to grow approximately 10% in the first-quarter 2015. The Gorilla Glass 4 unveils bright prospects in the consumer electronic market that should drive its growth in the long-run.
In addition, its LCD display markets look quite attractive. Its display sales have increased 69% in the fourth-quarter 2014 to $1.1 billion. For the full year, the display segment posted $4.4 billion sales, an uptick of nearly 63% over 2013. This improvement in sales demonstrates great potential for its products in the markets that continue to win extra market share for Corning. Looking ahead in 2015, the company sees strong demand for larger LCD televisions.
Corning has experienced growth in average television size in 2014. The average size of the 15-plus-inch television increased more than an inch. This led its television sales increased more than 50% in 2014. Corning sees great opportunities with its LCD televisions in 2015 with these increases in sizes. It expects the TV unit and average screen size growth to drive growth for its LCD glass at retail with increasing glass demand across the world.
Corning anticipates glass market growth at retail to be in the upper high-single digit in 2015. The company expects its Ultra-high definition sales to grow more than double to about 25 million units in 2015. It has built healthy supply chain inventory in the first-quarter 2015. So, this market remains quite bullish for Corning. And with the integration of CPM it should enhance its top as well as bottom line performance in 2015.
Conclusion
Corning has performed well in the past and the stock is expected to do well in 2015 and beyond. It has tremendous growth prospects at its fold with great innovation and diversified product portfolio. Moreover, the glass and speciality material markets look pretty healthy in the future that should supplement its growth in 2015. The analysts expect its earnings to grow at CAGR of 11.20% for the next five years. This indicates significant returns for shareholders in the long run.
The stock is a little expensive with trailing P/E of 14.41 and forward P/E of 15.04. However, looking at its growth prospects, investors can include the stock in their portfolios. It has PEG ratio of 1.45 that continuous to support its growth in the future. Moreover, its profit and operating profit margins have been 25.45% and 18.91%, respectively, for the past 12 months, which is pretty good. Its balance sheet covers total cash of $6.07 billion, more than enough to cover its entire debt of $3.34 billion. Corning has operating cash flow of $4.71 billion and levered free cash flow of $1.24 billion.
