Wednesday, January 26, 2011

Corning posts 4Q10 earnings.

Corning has reported earnings of $0.45, just one penny shy of analyst expectations. Revenue numbers came in at $1.77B which was far ahead of the expected $1.61B analysts were looking for. After earnings were released Corning finished the day up 7.9%, closing at $21.21. We have not seen a price this high since August 2008.

Full year sales were $6.6B, a 23% increase over a year ago, with each of the company's business segments growing year over year. Full year gross margin improved 700bps to 46% year over year. Corning ended the year with $4.59B in cash and continues to look attractive.

Gorilla Glass continues to be gaining traction. It is part of the specialty materials division of the company, which has grown revenue 70% year over year. This revenue made up 9% of Corning's total revenue in 2010.

Corning currently trades at a P/E of 10.3 and doesn't seem to price in growth at all. CFO Jim Flaws stated "it might be possible for Gorilla Glass to reach $1B in sales in 2011 depending how the TV market takes to the product." Seeing a 76% growth in EPS year over year and a strong outlook, I do not see why this stock is not trading at a higher P/E. If the P/E was to grow to 15, Corning would be trading over $30. It seems the market is overlooking the growth Corning is experiencing.

-Rory Blake

No comments: