Corning Inc Valuation – January 2019 $GLW

Company Profile (excerpt from Reuters): Corning Incorporated (Corning), incorporated on December 24, 1936, is engaged in manufacturing specialty glass and ceramics. The Company’s segments include Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials, Life Sciences and All Other. The Company provides glass for notebook computers, flat panel desktop monitors, liquid crystal display (LCD) televisions, and other information display applications; carrier network and enterprise network products for the telecommunications industry; ceramic substrates for gasoline and diesel engines in automotive and heavy duty vehicle markets; laboratory products for the scientific community and specialized polymer products for biotechnology applications; optical materials for the semiconductor industry and the scientific community, and other technologies. As of December 31, 2016, the Company had manufactured products at 98 plants in 17 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GLW – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $23,803,872,024 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.13 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -27.31% Fail
6. Moderate PEmg Ratio PEmg < 20 25.88 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.98 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.13 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.44 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.15
MG Growth Estimate -3.81%
MG Value $1.02
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $16.66
MG Value based on 0% Growth $9.76
Market Implied Growth Rate 8.70%
Current Price $29.76
% of Intrinsic Value 2923.15%

Corning Incorporated does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.54 in 2014 to an estimated $1.15 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.7% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Corning Incorporated revealed the company was trading above its Graham Number of $21.29. The company pays a dividend of $0.62 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 25.91, which was below the industry average of 33.25, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-6.22.

Corning Incorporated scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$6.22
Graham Number $21.29
PEmg 25.91
Current Ratio 2.13
PB Ratio 1.98
Current Dividend $0.62
Dividend Yield 2.08%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $6,632,000,000
Total Current Liabilities $3,112,000,000
Long-Term Debt $5,056,000,000
Total Assets $26,392,000,000
Intangible Assets $3,239,000,000
Total Liabilities $12,414,000,000
Shares Outstanding (Diluted Average) 930,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.29
Dec2017 -$0.66
Dec2016 $3.23
Dec2015 $1.00
Dec2014 $1.73
Dec2013 $1.34
Dec2012 $1.09
Dec2011 $1.78
Dec2010 $2.25
Dec2009 $1.28
Dec2008 $3.32
Dec2007 $1.34
Dec2006 $1.16
Dec2005 $0.38
Dec2004 -$1.61
Dec2003 -$0.22
Dec2002 -$1.39
Dec2001 -$5.89
Dec2000 $0.49
Dec1999 $0.22
Dec1998 $0.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.15
Dec2017 $1.16
Dec2016 $1.94
Dec2015 $1.33
Dec2014 $1.54
Dec2013 $1.48
Dec2012 $1.68
Dec2011 $1.98
Dec2010 $2.01
Dec2009 $1.76
Dec2008 $1.64
Dec2007 $0.60
Dec2006 $0.04
Dec2005 -$0.92
Dec2004 -$1.63
Dec2003 -$1.54
Dec2002 -$1.89

Recommended Reading:

Other ModernGraham posts about the company

Corning Inc Valuation – February 2018 $GLW
Corning Inc Valuation – May 2016 $GLW
Corning Inc Valuation – November 2015 Update $GLW
Corning Inc. Analysis – August 2015 Update $GLW
30 Companies in the Spotlight This Week – 5/23/15

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Corning Inc Valuation – February 2018 $GLW

Company Profile (obtained from Marketwatch): Corning, Inc. develops and manufactures specialty glass and ceramics. The company provides glass for notebook computers, flat panel desktop monitors, LCD televisions, and other information display applications; optical fiber and cable and hardware and equipment products for the telecommunications industry; ceramic substrates for gasoline and diesel engines in automotive and heavy duty vehicle markets; laboratory products for the scientific community and specialized polymer products for biotechnology applications; advanced optical materials for the semiconductor industry and the scientific community; and other technologies. It operates through through the following business segments: Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials and Life Sciences. The Display Technologies segment manufactures glass substrates for active matrix liquid crystal displays which are used primarily in notebook computers, flat panel desktop monitors, and LCD televisions. The Optical Communications segment manufactures optical fiber and cable, and hardware and equipment to being a comprehensive provider of industry-leading optical solutions across the broader communications industry pioneer optical fiber, cable and connectivity solutions. The Environmental Technologies segment manufactures ceramic substrates and filter products for emissions control in mobile and stationary applications around the world. The Specialty Materials segment manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals to meet demand for unique customer needs. The Life Sciences segment develops, manufactures and supplies scientific laboratory products. Corning was founded by Amory Houghton Sr. in 1851 and is headquartered in Corning, NY.

GLW Chart

GLW data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GLW – February 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $24,934,736,664 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.75 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -21.66% Fail
6. Moderate PEmg Ratio PEmg < 20 23.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.60 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.75 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.85 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.25
MG Growth Estimate -2.83%
MG Value $3.54
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $18.11
MG Value based on 0% Growth $10.61
Market Implied Growth Rate 7.39%
Current Price $29.08
% of Intrinsic Value 821.42%

Corning Incorporated does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.54 in 2014 to an estimated $1.25 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.39% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Corning Incorporated revealed the company was trading above its Graham Number of $23.56. The company pays a dividend of $0.62 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.29, which was below the industry average of 25.98, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.43.

Corning Incorporated scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.43
Graham Number $23.56
PEmg 23.29
Current Ratio 2.75
PB Ratio 1.60
Current Dividend $0.62
Dividend Yield 2.13%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $8,827,000,000
Total Current Liabilities $3,209,000,000
Long-Term Debt $4,749,000,000
Total Assets $27,494,000,000
Intangible Assets $2,563,000,000
Total Liabilities $11,796,000,000
Shares Outstanding (Diluted Average) 865,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.59
Dec2017 -$0.66
Dec2016 $3.23
Dec2015 $1.00
Dec2014 $1.73
Dec2013 $1.34
Dec2012 $1.09
Dec2011 $1.78
Dec2010 $2.25
Dec2009 $1.28
Dec2008 $3.32
Dec2007 $1.34
Dec2006 $1.16
Dec2005 $0.38
Dec2004 -$1.61
Dec2003 -$0.22
Dec2002 -$1.39
Dec2001 -$5.89
Dec2000 $0.49
Dec1999 $0.66
Dec1998 $0.56

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.25
Dec2017 $1.16
Dec2016 $1.94
Dec2015 $1.33
Dec2014 $1.54
Dec2013 $1.48
Dec2012 $1.68
Dec2011 $1.98
Dec2010 $2.01
Dec2009 $1.76
Dec2008 $1.64
Dec2007 $0.60
Dec2006 $0.04
Dec2005 -$0.92
Dec2004 -$1.63
Dec2003 -$1.51
Dec2002 -$1.81

Recommended Reading:

Other ModernGraham posts about the company

Corning Inc Valuation – November 2015 Update $GLW
Corning Inc. Analysis – August 2015 Update $GLW
30 Companies in the Spotlight This Week – 5/23/15
Corning Inc. Quarterly Valuation – May 2015 $GLW
34 Companies in the Spotlight This Week – 2/7/15

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Corning Inc Valuation – May 2016 $GLW

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – March 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Corning Inc (GLW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Corning Incorporated (Corning) is engaged in the manufacture of specialty glass and ceramics. The Company operates in five segments: Display Technologies, which manufactures glass substrates; Optical Communications, which is engaged in providing optical solutions; Environmental Technologies, which manufactures ceramic substrates and filter products; Specialty Materials, which manufactures products that provide over 150 material formulations for glass, glass ceramics and fluoride crystals, and Life Sciences segment, which is a developer, manufacturer and supplier of scientific laboratory products. The Display Technologies segment develops, manufactures and supplies glass substrates using a fusion manufacturing process. It manufactures and processes products at approximately 90 plants in approximately 20 countries. Corning offers its products under the trademarks, including Corning, Celcor, ClearCurve, DuraTrap, Eagle XG, Epic, Gorilla, HPFS, Pyrex, Steuben, Falcon, SMF-28e and Willow.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of GLW – May 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $20,935,833,812 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.80 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -32.83% Fail
6. Moderate PEmg Ratio PEmg < 20 15.15 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.20 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.80 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.85 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

GLW value chart May 2016

EPSmg $1.29
MG Growth Estimate -3.62%
MG Value $1.63
Opinion Overvalued
MG Grade B+
MG Value based on 3% Growth $18.68
MG Value based on 0% Growth $10.95
Market Implied Growth Rate 3.32%
Current Price $19.51
% of Intrinsic Value 1197.32%

Corning Incorporated qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the insufficient earnings growth over the last ten years. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.7 in 2012 to an estimated $1.29 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.32% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Corning Incorporated performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

GLW charts May 2016

Net Current Asset Value (NCAV) -$2.58
Graham Number $19.95
PEmg 15.15
Current Ratio 2.80
PB Ratio 1.20
Current Dividend $0.50
Dividend Yield 2.54%
Number of Consecutive Years of Dividend Growth 6

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $7,178,000,000
Total Current Liabilities $2,564,000,000
Long-term Debt $3,910,000,000
Total Assets $27,945,000,000
Intangible Assets $2,102,000,000
Total Liabilities $10,027,000,000
Shares Outstanding (Diluted Average) 1,103,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.26
12/1/2015 $1.00
12/1/2014 $1.73
12/1/2013 $1.34
12/1/2012 $1.15
12/1/2011 $1.77
12/1/2010 $2.25
12/1/2009 $1.28
12/1/2008 $3.32
12/1/2007 $1.34
12/1/2006 $1.16
12/1/2005 $0.38
12/1/2004 -$1.56
12/1/2003 -$0.18
12/1/2002 -$1.39
12/1/2001 -$5.89
12/1/2000 $0.48
12/1/1999 $0.65
12/1/1998 $0.56
12/1/1997 $0.62
12/1/1996 $0.25

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.29
12/1/2015 $1.33
12/1/2014 $1.55
12/1/2013 $1.49
12/1/2012 $1.70
12/1/2011 $1.98
12/1/2010 $2.01
12/1/2009 $1.76
12/1/2008 $1.64
12/1/2007 $0.61
12/1/2006 $0.06
12/1/2005 -$0.90
12/1/2004 -$1.60
12/1/2003 -$1.50
12/1/2002 -$1.81
12/1/2001 -$1.59
12/1/2000 $0.54

Recommended Reading:

Other ModernGraham posts about the company

Corning Inc Valuation – November 2015 Update $GLW
Corning Inc. Analysis – August 2015 Update $GLW
30 Companies in the Spotlight This Week – 5/23/15
Corning Inc. Quarterly Valuation – May 2015 $GLW
34 Companies in the Spotlight This Week – 2/7/15

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Corning Inc Valuation – November 2015 Update $GLW

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Corning Inc. (GLW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Corning Incorporated (Corning) is engaged in the manufacture of specialty glass and ceramics. The Company creates and makes keystone components that enable systems for consumer electronics, mobile emissions control, optical communications and life sciences. Corning operates in five segments: Display Technologies, which manufactures glass substrates; Optical Communications, which is engaged in providing optical solutions; Environmental Technologies, which manufactures ceramic substrates and filter products; Specialty Materials, which manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals, and Life Sciences segment, which is a developer, manufacturer and supplier of scientific laboratory products. The Company manufactures and processes products at approximately 90 plants in 17 countries.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of GLW – November 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $22,112,492,641 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.71 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -28.87% Fail
6. Moderate PEmg Ratio PEmg < 20 14.07 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.16 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.71 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.54 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

GLW value Chart November 2015

EPSmg $1.35
MG Growth Estimate -4.25%
MG Value $0.29
Opinion Overvalued
MG Value based on 3% Growth $19.57
MG Value based on 0% Growth $11.47
Market Implied Growth Rate 2.78%
Current Price $18.98
% of Intrinsic Value 6567.51%

Corning Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the inconsistent dividend record along with the insufficient earnings growth over the last ten years.  The Enterprising Investor is only initially concerned by the lack of earnings growth over the last five years.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) decline from $1.98 in 2011 to an estimated $1.35 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 2.78% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Corning Inc. (GLW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

GLW Charts November 2015

Net Current Asset Value (NCAV) $0.29
Graham Number $18.97
PEmg 14.07
Current Ratio 4.71
PB Ratio 1.16
Dividend Yield 2.42%
Number of Consecutive Years of Dividend Growth 5

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $9,253,000,000
Total Current Liabilities $1,966,000,000
Long-Term Debt $3,915,000,000
Total Assets $28,898,000,000
Intangible Assets $2,008,000,000
Total Liabilities $8,901,000,000
Shares Outstanding (Diluted Average) 1,218,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.07
Dec14 $1.73
Dec13 $1.34
Dec12 $1.09
Dec11 $1.77
Dec10 $2.25
Dec09 $1.28
Dec08 $3.32
Dec07 $1.34
Dec06 $1.16
Dec05 $0.38
Dec04 -$1.61
Dec03 -$0.22
Dec02 -$1.39
Dec01 -$5.89
Dec00 $0.49
Dec99 $0.66
Dec98 $0.56
Dec97 $0.62
Dec96 $0.25
Dec95 -$0.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.35
Dec14 $1.54
Dec13 $1.48
Dec12 $1.68
Dec11 $1.98
Dec10 $2.01
Dec09 $1.76
Dec08 $1.64
Dec07 $0.60
Dec06 $0.04
Dec05 -$0.92
Dec04 -$1.63
Dec03 -$1.51
Dec02 -$1.81
Dec01 -$1.58
Dec00 $0.55
Dec99 $0.52

Recommended Reading:

Other ModernGraham posts about the company

Corning Inc. Analysis – August 2015 Update $GLW
30 Companies in the Spotlight This Week – 5/23/15
Corning Inc. Quarterly Valuation – May 2015 $GLW
34 Companies in the Spotlight This Week – 2/7/15
Corning Inc. Quarterly Valuation – February 2015 $GLW

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Corning Inc. Analysis – August 2015 Update $GLW

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Corning Inc. (GLW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Corning Incorporated (Corning) is engaged in the manufacture of specialty glass and ceramics. The Company creates and makes keystone components that enable systems for consumer electronics, mobile emissions control, optical communications and life sciences. Corning operates in five segments: Display Technologies, which manufactures glass substrates; Optical Communications, which is engaged in providing optical solutions; Environmental Technologies, which manufactures ceramic substrates and filter products; Specialty Materials, which manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals, and Life Sciences segment, which is a developer, manufacturer and supplier of scientific laboratory products. The Company manufactures and processes products at approximately 90 plants in 17 countries.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of GLW – August 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Fail
6. Moderate PEmg Ratio PEmg < 20 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg 1.44
MG Growth Estimate -4.11%
MG Value $0.70
Opinion Overvalued
MG Value based on 3% Growth $20.82
MG Value based on 0% Growth $12.21
Market Implied Growth Rate 1.93%
Current Price $17.75
% of Intrinsic Value 2527.02%

Corning Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the inconsistent dividend record, and the insufficient earnings growth over the last ten years.  The Enterprising Investor is only initially concerned with the lack of earnings growth over the last five years.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) decline from $1.98 in 2011 to an estimated $1.44 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 1.93% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Corning Inc. (GLW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

GLW charts August 2015

Net Current Asset Value (NCAV) $0.70
PEmg 12.36
Current Ratio 4.88
PB Ratio 1.16
Dividend Yield 2.48%
Number of Consecutive Years of Dividend Growth 5

 

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Most Recent Balance Sheet Figures

Total Current Assets $9,868,000,000
Total Current Liabilities $2,022,000,000
Long-Term Debt $3,910,000,000
Total Assets $29,888,000,000
Intangible Assets $2,043,000,000
Total Liabilities $8,905,000,000
Shares Outstanding (Diluted Average) 1,371,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.33
Dec14 $1.73
Dec13 $1.34
Dec12 $1.09
Dec11 $1.77
Dec10 $2.25
Dec09 $1.28
Dec08 $3.32
Dec07 $1.34
Dec06 $1.16
Dec05 $0.38
Dec04 -$1.61
Dec03 -$0.22
Dec02 -$1.39
Dec01 -$5.89
Dec00 $0.49
Dec99 $0.66
Dec98 $0.56
Dec97 $0.62
Dec96 $0.25
Dec95 -$0.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.44
Dec14 $1.54
Dec13 $1.48
Dec12 $1.68
Dec11 $1.98
Dec10 $2.01
Dec09 $1.76
Dec08 $1.64
Dec07 $0.60
Dec06 $0.04
Dec05 -$0.92
Dec04 -$1.63
Dec03 -$1.51
Dec02 -$1.81
Dec01 -$1.58
Dec00 $0.55
Dec99 $0.52

Recommended Reading:

Other ModernGraham posts about the company

30 Companies in the Spotlight This Week – 5/23/15
Corning Inc. Quarterly Valuation – May 2015 $GLW
34 Companies in the Spotlight This Week – 2/7/15
Corning Inc. Quarterly Valuation – February 2015 $GLW
28 Companies in the Spotlight This Week – 11/1/14

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Western Digital Corporation Analysis – July 2015 Update $WDC
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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.

Corning Inc. Quarterly Valuation – May 2015 $GLW

500px-Corning_Incorporated_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – May 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Corning Inc. (GLW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Corning Incorporated (Corning) is engaged in the manufacture of specialty glass and ceramics. The Company operates in five segments: Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials and Life Sciences. Its Display Technologies segment manufactures glass substrates for flat panel liquid crystal displays. Optical Communications segment manufactures carrier network and enterprise network components for the telecommunications industry. Its Environmental Technologies segment manufactures ceramic substrates and filters for automotive and diesel applications. Specialty Materials segment manufactures products that provides material formulations for glass, glass ceramics and fluoride crystals. Life Sciences segment manufactures glass and plastic labware, equipment, media and reagents. iBwave Solutions, Inc. is a wholly owned subsidiary of Corning and operates under its Optical Communications business segment.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $21.28
MG Value $1.15
MG Opinion Overvalued
Value Based on 3% Growth $21.31
Value Based on 0% Growth $12.49
Market Implied Growth Rate 2.99%
Net Current Asset Value (NCAV) $0.87
PEmg 14.48
Current Ratio 4.87
PB Ratio 1.39

Balance Sheet – March 2015

Current Assets $9,238,000,000
Current Liabilities $1,895,000,000
Total Debt $3,165,000,000
Total Assets $29,323,000,000
Intangible Assets $2,045,000,000
Total Liabilities $8,025,000,000
Outstanding Shares 1,394,000,000

Earnings Per Share

2015 (estimate) $1.43
2014 $1.73
2013 $1.34
2012 $1.09
2011 $1.77
2010 $2.25
2009 $1.28
2008 $3.32
2007 $1.34
2006 $1.16
2005 $0.38

Earnings Per Share – ModernGraham

2015 (estimate) $1.47
2014 $1.54
2013 $1.48
2012 $1.68
2011 $1.98
2010 $2.01

Dividend History

Conclusion:

Corning Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the short dividend history, and insufficient earnings growth over the last ten years, while the Enterprising Investor is only concerned by the lack of earnings growth over the last five years.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $1.98 in 2011 to only an estimated $1.47 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 2.99% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value falling below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Corning Inc. (GLW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Corning Inc. Quarterly Valuation – February 2015 $GLW

500px-Corning_Incorporated_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – January 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Corning Inc. (GLW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Corning Incorporated (Corning), is a global, technology-based corporation. The Company operates in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials and Life Sciences. During the year ended December 31, 2011, Corning launched Corning Lotus Glass, an environmentally friendly, display glass developed to enable technologies, including organic light-emitting diode (OLED) displays and next generation liquid crystal displays (LCD). Corning Lotus Glass helps support the demanding manufacturing processes of both OLED and liquid crystal displays for portable devices, such as smart phones, tablets, and notebook computers. During the year ended December 31, 2011, Corning introduced Corning Gorilla Glass 2, the next generation in its Corning Gorilla Glass suite of products. In May 2014, Mitsui Chemicals Inc announced the acquisition of Corning Inc’s SunSensors operations.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $24.38
MG Value $2.21
MG Opinion Overvalued
Value Based on 3% Growth $22.30
Value Based on 0% Growth $13.07
Market Implied Growth Rate 3.68%
Net Current Asset Value (NCAV) $1.25
PEmg 15.85
Current Ratio 4.41
PB Ratio 1.58

Balance Sheet – December 2014

Current Assets $10,238,000,000
Current Liabilities $2,324,000,000
Total Debt $3,227,000,000
Total Assets $30,063,000,000
Intangible Assets $1,647,000,000
Total Liabilities $8,484,000,000
Outstanding Shares 1,402,000,000

Earnings Per Share

2014 $1.73
2013 $1.34
2012 $1.09
2011 $1.77
2010 $2.25
2009 $1.28
2008 $3.32
2007 $1.34
2006 $1.16
2005 $0.38
2004 -$1.61

Earnings Per Share – ModernGraham

2014 $1.54
2013 $1.48
2012 $1.68
2011 $1.98
2010 $2.01
2009 $1.76

Dividend History

Conclusion:

Corning Inc. qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor’s only initial concern is the short dividend history.  The Enterprising Investor is only concerned by the lack of earnings growth over the last five years.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $2.01 in 2010 to only an estimated $1.54 for 2014.  This lack of demonstrated growth does not support the market’s implied estimate of 3.68% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Corning Inc. (GLW) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Corning Inc. (GLW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Corning Inc. (GLW) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Corning Inc. Quarterly Valuation – October 2014 $GLW

500px-Corning_Incorporated_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies to Research for the Defensive Investor – October 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Corning Inc. (GLW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Corning Incorporated (Corning), is a global, technology-based corporation. The Company operates in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials and Life Sciences. During the year ended December 31, 2011, Corning launched Corning Lotus Glass, an environmentally friendly, display glass developed to enable technologies, including organic light-emitting diode (OLED) displays and next generation liquid crystal displays (LCD). Corning Lotus Glass helps support the demanding manufacturing processes of both OLED and liquid crystal displays for portable devices, such as smart phones, tablets, and notebook computers. During the year ended December 31, 2011, Corning introduced Corning Gorilla Glass 2, the next generation in its Corning Gorilla Glass suite of products. In May 2014, Mitsui Chemicals Inc announced the acquisition of Corning Inc’s SunSensors operations.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $18.67
MG Value $0.00
MG Opinion Overvalued
Value Based on 3% Growth $20.61
Value Based on 0% Growth $12.08
Market Implied Growth Rate 2.32%
Net Current Asset Value (NCAV) $1.37
PEmg 13.14
Current Ratio 4.53
PB Ratio 1.13

Balance Sheet – June 2014

Current Assets $9,864,000,000
Current Liabilities $2,177,000,000
Total Debt $3,238,000,000
Total Assets $29,832,000,000
Intangible Assets $1,682,000,000
Total Liabilities $8,069,000,000
Outstanding Shares 1,315,000,000

Earnings Per Share

2014 (estimate) $1.38
2013 $1.34
2012 $1.09
2011 $1.77
2010 $2.25
2009 $1.28
2008 $3.32
2007 $1.34
2006 $1.16
2005 $0.38
2004 -$1.61

Earnings Per Share – ModernGraham

2014 (estimate) $1.42
2013 $1.48
2012 $1.68
2011 $1.98
2010 $2.01
2009 $1.76

Dividend History

Conclusion:

Corning Inc. is suitable for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned with the short dividend history and the lack of sufficient earnings growth over the last ten years, while the Enterprising Investor’s only initial concern is the low earnings growth over the last five years.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $2.01 in 2010 to an estimated $1.42 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 2.32% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Corning Inc. (GLW) for a better perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Corning Inc. (GLW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Corning Inc. (GLW) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Corning Inc. Quarterly Valuation – July 2014 $GLW

500px-Corning_Incorporated_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies to Research for the Enterprising Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Corning Inc. (GLW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Corning Incorporated (Corning), is a global, technology-based corporation. The Company operates in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials and Life Sciences. During the year ended December 31, 2011, Corning launched Corning Lotus Glass, an environmentally friendly, display glass developed to enable technologies, including organic light-emitting diode (OLED) displays and next generation liquid crystal displays (LCD). Corning Lotus Glass helps support the demanding manufacturing processes of both OLED and liquid crystal displays for portable devices, such as smart phones, tablets, and notebook computers. During the year ended December 31, 2011, Corning introduced Corning Gorilla Glass 2, the next generation in its Corning Gorilla Glass suite of products. In May 2014, Mitsui Chemicals Inc announced the acquisition of Corning Inc’s SunSensors operations.
GLW Chart

GLW data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $22.02
MG Value $0.00
MG Opinion Overvalued
Value Based on 3% Growth $20.78
Value Based on 0% Growth $12.18
Market Implied Growth Rate 3.43%
Net Current Asset Value (NCAV) $1.32
PEmg 15.36
Current Ratio 4.70
PB Ratio 1.33

Balance Sheet – 3/31/2014

Current Assets $9,613,000,000
Current Liabilities $2,046,000,000
Total Debt $3,224,000,000
Total Assets $29,544,000,000
Intangible Assets $1,665,000,000
Total Liabilities $7,894,000,000
Outstanding Shares 1,306,000,000

Earnings Per Share

2014 (estimate) $1.38
2013 $1.34
2012 $1.15
2011 $1.77
2010 $2.25
2009 $1.28
2008 $3.32
2007 $1.34
2006 $1.16
2005 $0.38
2004 -$1.57

Earnings Per Share – ModernGraham

2014 (estimate) $1.43
2013 $1.49
2012 $1.70
2011 $1.98
2010 $2.01
2009 $1.76

Dividend History

GLW Dividend Chart

GLW Dividend data by YCharts

Conclusion:

Corning Inc. is suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor’s main concern at this point is the short dividend history while the Enterprising Investor is concerned with the lack of earnings growth over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities including a review of ModernGraham’s valuation of 3M Company (MMM).  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $2.01 in 2010 to only an estimated $1.43 for 2014. Clearly, this demonstrated drop in earnings does not support the market’s implied estimate of 3.43% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out the previous ModernGraham valuations of Corning Inc. (GLW) for more perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Corning Inc. (GLW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Corning Inc. (GLW) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Corning Inc. (GLW) Quarterly Valuation – April 2014

500px-Corning_Incorporated_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing 5 Low PEmg Companies for the Defensive Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Corning Inc. (GLW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Corning Incorporated (Corning) is a global, technology-based corporation. The Company operates in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials and Life Sciences. During the year ended December 31, 2011, Corning launched Corning Lotus Glass, an environmentally friendly, display glass developed to enable technologies, including organic light-emitting diode (OLED) displays and next generation liquid crystal displays (LCD). Corning Lotus Glass helps support the demanding manufacturing processes of both OLED and liquid crystal displays for portable devices, such as smart phones, tablets, and notebook computers. In March 2011, the Company acquired all outstanding shares from the shareholders of MobileAccess. In December 2011, it acquired Mediatech, Inc. In May 2013, the Company acquired Bargoa SA. Effective January 15, 2014, Corning Inc acquired the remaining 50.6% interest in Samsung Corning Precision Materials Co Ltd.

GLW Chart

GLW data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $20.74
MG Value $5.89
MG Opinion Overvalued
Value Based on 3% Growth $21.64
Value Based on 0% Growth $12.69
Market Implied Growth Rate 2.70%
Net Current Asset Value (NCAV) $1.13
PEmg 13.89
Current Ratio 5.09
PB Ratio 1.37

Balance Sheet – 12/31/2013

Current Assets $8,891,000,000
Current Liabilities $1,746,000,000
Total Debt $3,272,000,000
Total Assets $28,478,000,000
Intangible Assets $1,542,000,000
Total Liabilities $7,316,000,000
Outstanding Shares 1,399,000,000

Earnings Per Share

2013 $1.34
2012 $1.15
2011 $1.77
2010 $2.25
2009 $1.28
2008 $3.32
2007 $1.34
2006 $1.16
2005 $0.38
2004 -$1.57

Earnings Per Share – ModernGraham

2013 $1.49
2012 $1.70
2011 $1.98
2010 $2.01
2009 $1.76
2008 $1.64

Dividend History

GLW Dividend Chart

GLW Dividend data by YCharts

Conclusion:

Corning Inc. is not suitable for Defensive Investors but is suitable for Enterprising Investors.  The Defensive Investor is concerned with the lack of earnings stability or growth over the last ten years, and the short dividend history.  The Enterprising Investor’s only concern is the lack of earnings growth over the last five years.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities through a review of 3M Company (MMM) and Intel Corporation (INTC).  From a valuation side of things, the company appears to be overvalued after seeing a drop in EPSmg (normalized earnings) from $1.76 in 2009 to $1.49 for 2013.  This demonstrated lack of growth does not support the market’s implied estimate of 2.7% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that falls below the market price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Corning Inc. (GLW)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Corning Inc. (GLW) or any other company mentioned in the article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

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