Corning profit seen higher, valuation lagging peers
Mon Jul 25, 2005 05:43 PM ET
SEATTLE, July 25 (Reuters) - Corning Inc. (GLW.N: Quote, Profile, Research) , which makes half of the glass used worldwide in computer screens and increasingly popular flat-screen televisions, could see its stock rise after it posts earnings on Tuesday, even as its stock has already risen 50 percent this year.
Corning, which also makes the glass for fiber optic networks as well as materials used in manufacturing things such as solar panels, trades at a discount to other players in the telecoms equipment industry.
Despite rallying more than 50 percent so far this year, Corning still lags behind its peers in the telecoms equipment industry with a valuation of 24 times earnings.
Corning's peer Nortel Networks Corp. (NT.TO: Quote, Profile, Research) (NT.N: Quote, Profile, Research) is trading at 42 times forward earnings, while Research In Motion Ltd. (RIMM.O: Quote, Profile, Research) (RIM.TO: Quote, Profile, Research) is trading at 46 times earnings.
Matthew Smith, analyst at CIBC World Markets, said in a recent note that, at current prices, Corning is being valued below its 10-year multiple average of over 30 times earnings.
"We recommend Corning shares to investors looking for leverage to rising LCD TV adoption," Smith said in a report.
Analysts are expecting Corning to post, on average, a profit of 18 cents per share on $1.1 billion in revenue for the second quarter when it reports earnings on Tuesday, according to forecasts compiled by Reuters Estimates.
Corning had a profit, excluding items, of 11 cents per share on 971 million in the second quarter of last year.
In May, Corning said it remained "confident" it will achieve its own guidance for second-quarter sales of $1.08 billion to $1.13 billion and earnings of 17 cents to 19 cents a share, excluding special items.
The company lowered its outlook, however, for second-quarter sales growth in its telecommunications segment to between flat to up 5 percent from the first quarter, which triggered a brief sell-off in Corning's shares.
The shares have since recovered, and are up more than 50 percent from just below $12 seen at the beginning of 2006. Corning's shares rose 0.62 percent to close at $17.79 on Monday on the New York Stock Exchange. |
