Corning Is Ready To Break Out

Apr.25.12 | About: Corning Inc. (GLW)

Corning (NYSE:GLW) has been one of biggest laggards in my portfolio over the last six months. It offers a compelling valuation and a solid dividend, but has done nothing over the last half year. However, it came in with a better than expected earnings report Wednesday and finally looks ready to move forward. Key earnings highlights for Corning:

  • Earnings came in at 30 cents a share, beating estimates by two pennies.
  • Revenues came in $50mm above expectations.
  • The company's CFO came out and stated that he expects LCD glass price declines to moderate in the next quarter versus the last two quarters.
  • Both the Telecommunications and Specialty Materials business are expected to grow revenues at a 10% to 15% going forward.

4 additional reasons Corning has solid upside from just over $13 a share:

  • It has a rock solid balance sheet with over $3.5B in net cash (over 15% of market capitalization) and provides a yield of 2.3%.
  • The stock has a forward PE of under 9, below its historical average of around 12 times forward earnings.
  • The 20 analysts that cover the stock is $16 a share. Corning is selling for less than 7 times operating cash flow as well. It increased OCF by approximately 60% from FY2009 to FY2011.
  • The stock has spent the last six months building a technical support base right under current levels (see chart).

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Disclosure: I am long GLW.