GLW posts Q4 results; Display segment shows signs of a recovery in mobile and PCs

Corning Incorporated (GLW) released its earnings report for the fourth quarter. Despite a decline in sales, the company demonstrated improvements in gross margin and cash generation. 

In terms of Earnings per share (EPS), Corning reported core EPS of 39 cents, slightly missing the analyst estimate of 40 cents. This represents a decrease compared to the previous year's fourth quarter, which saw core EPS of 47 cents. Although falling short of expectations, the company's core gross margin experienced a significant improvement of over 300 basis points year over year, reflecting management's measures to increase prices, enhance productivity ratios, and reduce inventory.

Corning recorded core sales of $3.27 billion, a -9.9% decline but exceeding the estimated $3.26 billion figure. Display Technologies net sales increased by 11% compared to the previous year, reaching $869 million, surpassing the estimated $876.6 million. However, other segments experienced declines in net sales: Optical Communications (-24% y/y), Specialty Materials (-6.3% y/y), Life Sciences (-18% y/y), and All Other (-23% y/y), missing analyst estimates to varying degrees. 

Adjusted free cash flow also showed improvement, amounting to $487 million.

Looking ahead, Corning anticipates the first quarter of the year to be the low point, with projected core sales of approximately $3.1 billion and core EPS in the range of $0.32 to $0.38. However, the company remains optimistic as markets normalize, expecting to add over $3 billion in annualized sales and deliver robust incremental profit and cash flow. Investors should closely monitor Corning's ability to execute its strategies for sales growth and profitability. 

Shares of GLW were primed for a breakout on a good report. This fell a little short, but the stock is still reacting positively as it edges above the 200-sma ($31.17) in pre-market trade. An ability to hold this level would be impressive and lead more investors into the name as expectations for a recovery in mobile and PC is a key theme for 2024.