With A -131.35% Earnings Drop, Did Corning Incorporated (NYSE:GLW) Really Underperform?

When Corning Incorporated (NYSE:GLW) released its most recent earnings update (31 March 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Corning performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see GLW has performed. Check out our latest analysis for Corning

Was GLW’s recent earnings decline worse than the long-term trend and the industry?

For the purpose of this commentary, I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to analyze many different companies on a similar basis, using the latest information. For Corning, its most recent bottom-line (trailing twelve month) is -US$1.27B, which compared to last year’s level, has turned from positive to negative. Since these values are somewhat short-term, I have created an annualized five-year value for Corning’s earnings, which stands at US$2.00B.

NYSE:GLW Income Statement Jun 4th 18
NYSE:GLW Income Statement Jun 4th 18
We can further analyze Corning’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Corning’s top-line has increased by a mere 4.50%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Inspecting growth from a sector-level, the US electronic industry has been growing its average earnings by double-digit 15.94% in the previous twelve months, and 10.17% over the past five years. This means that any tailwind the industry is deriving benefit from, Corning has not been able to leverage it as much as its industry peers.

What does this mean?

Though Corning’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Corning may be facing and whether management guidance has regularly been met in the past. You should continue to research Corning to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for GLW’s future growth? Take a look at our free research report of analyst consensus for GLW’s outlook.
  2. Financial Health: Is GLW’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.