Producer of glass and optical products Corning (NYSE:GLW) the stock has been very resilient as it is only down (-1%) against a decline (-23%) for the Nasdaq 100 index. The maker of Gorilla Glass, COVID-19 vaccine vials and glass substrates used for LED displays and fiber optics, is riding a number of tailwinds despite widespread global supply chain disruptions. The activity is spread over 122 factories located in 15 countries. The CEO said the demand for Corning content moving forward has “never been greater.” Glass supplies remain tight, but pricing power has allowed Corning to negotiate higher prices on long-term contracts to help dampen raw material price inflation. Data center building tailwinds calling for fiber-rich wireless deployment has enabled optical communications to become the largest revenue segment for Corning. The company’s majority stake in Hemlock marks its footprint in ultra-pure polysilicon used in the semiconductor and solar energy industries. The Company has secured multi-year commitments as demand for renewable energy continues to grow. Conservative investors seeking exposure to glass substrate technology used in the technology and energy sectors may seek opportunistic pullbacks in Corning shares.
Publication of results for the first quarter of fiscal year 2022
On April 26, 2022, Corning released first quarter fiscal 2022 results for the quarter ending March 2022. The company reported earnings per share (EPS) of $0.54 excluding one-time items, beating consensus analyst estimates of $0.49, from $0.05. Revenue rose 14.7% year-over-year (YoY) to $3.74 billion, beating analyst estimates of $3.55 billion. Core gross margins increased sequentially by 36.6% year-on-year. Corning CEO Wendell Weeks commented, “We’re off to an exceptional start in 2022, driven by the overall strength of our business – driven by 28% year-over-year sales growth in communications optics and at always favorable prices in the display. In the first quarter, the company’s sales grew 15% year over year, with EPS growing even faster at 20%. We successfully navigated a complex geopolitical and external operating environment, and our pricing innovations and actions helped improve profitability. »
Corning released its guidance for the second quarter of fiscal 2022 with EPS estimates between $0.54 and $0.59 against consensus analyst estimates of $0.55 on revenue between $3.70 billion and $3.90 billion vs $3.69 consensus analyst estimate. The company grew revenue for fiscal 2022 to more than $15 billion, with sales growing at high single-digit percentages and EPS growing a few percentage points faster than sales.
Takeaways from the conference call
CEO Weeks had an upbeat tone as he recapped the quarter’s strong performance, highlighting the 20% year-over-year EPS growth and 15% sales growth in the quarter. He also highlighted gross margin of 36.6% and operating margin of 17.6%, signifying continued year-over-year efficiency through pricing power in a traditionally weak period. The company was preemptive in the prior quarter to alert customers to price increases on long-term contracts to share rising costs. He expects prices to continue to rise in the second quarter as glass supply remains tight. Optical communications sales increased 28% year-on-year and accounted for 32% of total sales volume. It represents the largest revenue segment. Carriers continue to expand their networks as data center construction accelerates, calling for fiber-rich wireless deployments. Sales to mobile electronics customers increased 9%, driven by strong demand for its premium cover materials and advanced optical products. The company is raising annual sales expectations to exceed $15 billion. He also noted that Corning owns 80.5% of Hemlock, which manufactures ultra-pure polysilicon for computer chips and solar industries.
GLW Opportunistic Withdrawal Levels
Using rifle charts on weekly and daily timeframes provides an accurate view of the landscape for the GLW stock. The weekly Rifles chart peaked near $4.36 Fibonacci level (fib). Shares tumbled to the $33.46 fib level as it staged a rally on its earnings release. The downward trend in the weekly Rifles chart was disrupted by the revenue gap. This caused the resistance of the 5-period moving average (MA) to turn into support as it stalled. The weekly 15-period MA also stalled at $38.04 with the weekly 50-period MA just above it at $38.75. The weekly 200-period MA support lies at $33.53. The stochastic drop has stalled and is trying to climb back up while below the 20 band. The Weekly weak market structure (MSL) buy triggers above the $38.26 level. The daily Rifle chart has a breakout with a 5-period rising MA at $36.55 which overlaps the daily 50-period MA at $36.59 with a 15-period rising MA at $35.47. The daily upper Bollinger Bands (BB) lie at $38.12 as they straddle the daily 200-period MA at $38.21. The daily stochastic has a mini stochastic pup above the 80 band. Conservative investors should wait for opportunistic pullback levels to consider exposure at the $35.32, $33.46, $31.67, $30.04, $27.34, $26.21 and 25.22 level $. The upward trajectories range from the $40.76 fib to the $49.56 fib level.