Corning Inc. (NYSE: GLW) may need to go back to its Glassworks name. The stock is proving to be as fragile as glass, and not its Gorilla Glass either. Unfortunately, even with all of the tablets and smartphones, Corning has said that it expects a decline in glass volumes due to a seasonal inventory correction. It also expects that price declines may be higher than it saw in the last quarter as well. Corning looks like a value stock if you run any traditional screens. Its status would be a value stock, but Corning looks more and more like a value trap.
So, even if these expected drops are projected in the single digits it is still a double-whammy. What is so interesting is that Corning marginally beat expectations in the last quarter (earnings were $0.34 EPS and $2.04 billion in sales versus estimates of $0.32 EPS and $2.02 billion in revenues. Apparently, no one thinks that this guidance was sand-bagged just so it could have a positive surprise.
What is worrisome here is not just that the company blamed global economic headwinds for the weakness. The company said that the headwinds are expected to continue next year. If you take Corning at its word and just keep sales and revenue flat in 2013, Corning now trades after a large drop at only about 9.5-times earnings and about 2.5-times sales. The company has a dividend yield of 2.7%.
Everything you have just heard makes this stock sound cheap on the surface. So is Corning a value stock? Unfortunately, Corning has become a value trap. To prove the point, shares are down over 9% at $12.14 and we have already seen more than twice its normal volume since 27 million shares have traded.
Corning shares have traded in a range of $10.62 to $15.75 over the last 52-weeks.
JON C. OGG
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.