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Corning (GLW) Hits 52-Week High: What’s Driving the Stock?


Shares of Corning Incorporated GLW hit a 52-week high of $33.78 on Jan 4, closing marginally lower at $33.76. The company has gained 37.7% in the last year, outperforming the industry’s rally of 24.8%. The stock has a market cap of $27.64 billion.

What’s Behind the Rally?

The rally in shares can be accredited to Corning’s leadership in glass substrates, strong relationships and share buyback policy and acquisition of 3M’s communication market division.

With increasing demand for efficient data networks for mobile devices, Corning’s fiber optic solutions business has seen significant growth. Itis expected to act as a key growth catalyst over the next few years.

The company has also been benefiting from its innovations in the glass substrate industry. Corning’s generation 10 substrates, which use EAGLE XG formulation, not only provides superior picture quality but also minimize its effect on the environment.

This Zacks Rank #3 (Hold) company has been an investor favorite. Through its strategy and capital allocation framework, Corning plans to return $12.5 billion to its shareholders through buyback in the near term. Its buyback policy has made it easier for the company to grow EPS.

Successful Acquisitions and Product Adoptions

Corning recently announced that it has agreed to take over 3M Company’s Communication Markets Division completely in an all-cash deal for approximately $900 million. Acquisition of 3M’s communication market division will not only strengthen the company’s Optical Communications worldwide market access but also expand Corning’s product portfolio. Moreover, the company expects the deal to add 7-9 cents to 2019 earnings.

Considering growth witnessed by the Optical Communications market in the last few years, this deal will boost Corning’s revenues and increase overall market share. In the recently reported third-quarter 2017 results, Optical Communications segment generated 35.3% of total revenues. Reported segment revenues increased 15.3% year over year and 4% on a sequential basis to $917 million on the back of strong demand for both enterprise and carrier products.

Further, Ford’s use of Corning Gorilla Glass for its Ford GT is aiding the company to successfully penetrate the 6 billion-square-foot auto glazing market. Corning has also announced a joint venture with Saint-Gobain Sekurit to manufacture, develop and sell lightweight automotive glazing solutions. This venture has allowed the company to move forward in the value chain beyond glass to manufacture and sell glazing solutions with a leading producer.

Encouraging Earnings Surprise History

Corning outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive earnings surprise of 8.74%.

Further, the company has a long-term expected EPS growth rate of 7.1%.

To Conclude

Corning is benefiting from robust performance of its Optical Communications and specialty material business lines. Moreover, the company remains focused on expanding its footprint in the automotive market driven by Gorilla-sized automotive glass business. Additionally, growth of the fiber optics solutions business is expected to drive the company forward.

Stocks to Consider

Some better-ranked stocks in the broader technology sector are NetApp, IncNTAP, NVIDIA Corporation NVDA and Broadcom Limited AVGO, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NetApp, NVIDIA and Broadcom have a long-term expected EPS growth rate of 11.34%, 10.25% and 13.75%, respectively.

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