Corning (GLW) is a dominant glassmaker. It is the world’s biggest producer of glass for liquid crystal displays — found in flat-panel TVs, computer monitors and smaller consumer electronic devices — making it a consumer tech play. Sales of those items are growing rapidly, boosting Corning’s bottom line.
The company has diversified its glassmaking to encompass telecommunications, environmental technologies, special materials, and life sciences business units, yet the display division still accounts for 40 percent of Corning revenue and more than half of profits.
Corning’s advanced technology allows it to make bigger, thinner, and higher-quality pieces of glass than its competitors. As a result, the company and its 50-percent-owned subsidiary, Samsung Corning Precision, own more than half of the glass panel market and generate some of the largest profit margins in the industry, according to Morningstar.
Corning also makes glass (known as "gorilla glass" for its resistance to damage) for mobile devices, such as smart phones and tablets. The rapid growth of those products should provide the company with a strong revenue stream.
All the consumer products for which Corning makes glass are vulnerable to the business cycle, as evidenced by the consumer-spending downturn of 2008-09. So Corning is vulnerable too. But the long-term outlook for such consumer products is strong.
Corning recently raised its dividend by 50 percent. Its profit rose 3 percent in the third quarter to $811 million from a year earlier. Revenue jumped 30 percent to $2.1 billion.
Standard & Poor’s analyst Todd Rosenbluth has a four-star buy rating on Corning shares. “Global demand for GLW's LCD glass is appearing to slow due to modest inventory building at some customers,” he writes.
“However, we expect this to be temporary, and we look for improvement in display volume and growth in environmental and telecom operations to result in higher sales in 2012. . . . We believe GLW shares are undervalued.”
The company next reports earnings Jan. 24.
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