Corning Stock Plummets on Weak Q3 Outlook and Underwhelming Results

Corning Stock Sinks as Results, Q3 Outlook Underwhelm

The company's stock had soared earlier this month after it lifted its second-quarter adjusted earnings guidance on AI fueling demand for its optical products. Shares of Corning (GLW), a beneficiary of the artificial intelligence (AI) boom, tumbled Tuesday after the specialty glass maker's second-quarter results and current-quarter guidance missed analysts' expectations. The company's shares soared earlier this month after it lifted its second-quarter adjusted earnings guidance on AI fueling demand for its optical products. But on Tuesday, its shares plunged 8.5% as of 12:30 p.m. ET on GAAP Q2 results that missed estimates and a disappointing third-quarter outlook. Corning said that it expects core sales to grow to about $3.7 billion in the third quarter, with core earnings per share (EPS) in the range of $0.50 to $0.54. Analysts polled by Visible Alpha had been expecting $3.75 billion and $0.55, respectively. For the second quarter, Corning reported EPS of $0.12 on revenue of $3.25 billion, while analysts were looking for $0.33 and $3.36 billion, respectively. However, Corning's adjusted Q2 figures were stronger. It posted core EPS of $0.47, topping its own raised guidance, on $3.6 billion in core sales, which matched its revised expectations. The core EPS figure matched Visible Alpha estimates and core sales narrowly beat them. Chief Executive Officer (CEO) Wendell Weeks said the results were "driven primarily by the strong adoption of our new optical connectivity products for generative AI." Despite their slump Tuesday, Corning shares have gained 28% year-to-date.

Why Corning Stock Dropped 11.9% Today

Q2 earnings were fine, but guidance took investors' focus today. Shares of Corning (GLW -7.36%) fell as much as 11.9% in trading on Tuesday after the company reported second-quarter financial results. Shares are down 8.2% as of 3 p.m. ET. An earnings beat but a guidance flop Corning reported a modest 3.4% increase in revenue to $3.6 billion and non-GAAP (adjusted) earnings per share was $0.47, which met analyst estimates. But the company guided for $3.7 billion in revenue and earnings of $0.50 to $0.54 per share, which was below the $0.55 in earnings analysts expected. The company also announced a deal with Lumen Technologies to sell 10% of its fiber capacity to the company. This will be used to build faster connections between artificial intelligence (AI) data centers. In theory, this should be a long-term growth channel for the company, although 10% of capacity is not a big percentage of the company's revenue. Growth is priced in While modestly better-than-expected results are nice, Corning isn't a high-growth company or a great value for investors. Shares trade for 19 times forward earnings estimates and analysts are only expecting 5.4% growth for the company over the next two years. Products like AI data centers may get a lot of attention, but I don't think it fundamentally changes the underlying economics of a company like Corning. Manufacturers have had a hard time extracting value from the explosion in tech spending and that continues with Corning. That's why I'm not buying the discount in shares today.

Corning sees weak Q3 profit on slow demand for clean-air tech

July 30 (Reuters) - Specialty glass maker Corning (GLW.N), opens new tab forecast current-quarter profit largely below Wall Street estimates on Tuesday, blaming a slowdown in demand for its clean-air technologies, even as it saw robust sales for its optical fiber products. Shares slipped more than 8% in early trading as the report failed to rally investors, who were betting on the growing adoption of generative artificial intelligence technologies to drive the company's profits higher. Corning's optical communications segment, its largest unit, has benefited from higher demand for fiber optic cables driven by improved spending from wireless carriers as well as companies building AI operations that require high-capacity optic cables. The business saw a 4% increase in sales in the quarter ended June 30. It was not enough to offset a 6% slump in sales at its Environmental Technologies unit, which makes filter products for emissions control in automobiles, due to slowing demand for heavy-duty Class 8 trucks amid a freight slowdown in North America. The segment's net income fell 9% to $97 million. Known for the Gorilla Glass used in smartphones made by companies including Apple (AAPL.O), opens new tab and Samsung (005930.KS), opens new tab, Corning projected core earnings between 50 cents and 54 cents for the third quarter, the midpoint of which is below analysts' average estimate of 54 cents, according to LSEG data. New York-based Corning forecast core sales of about $3.7 billion, a touch below analysts' estimate of $3.75 billion. The company reported core sales of $3.60 billion in the second quarter, edging past market expectations of $3.55 billion. Its adjusted per-share profit of 47 cents topped estimates by 1 cent. Reporting by Deborah Sophia in Bengaluru Our Standards: The Thomson Reuters Trust Principles., opens new tab