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Corning, Like Economy, Is Clawing Its Way Back


Company's been beating expectations and the dividend looks good, too.

The Cold Play song "Viva la Vida" whose lyrics go "I used to rule the world" comes to mind when I think of Corning (GLW). This is because not too long ago, the New York-based company was kind of a rock star. Now, it's at $15 and change and not too many people seem to be paying much attention.

But is now the time to take advantage of the low price or go fishing in some other pond ahead of its earnings? Here are some of my thoughts on the glass maker:

1. From a big-picture perspective, I think that with the economy clawing its way back, we're going to see a lift in demand for stuff like LCD TVs, which could have the company ringing the register. And as populations and demand for electronics increase, my bet is Corning will fare very well. (I envision management somewhere in a boardroom rubbing its hands in anticipation of a sweet payday.)

2. The company is due out with its third-quarter numbers on October 26. The Street is looking for $0.38 but it could beat that number by a couple of cents. Note that the company has actually beaten expectations in each of the last two quarters and in three of the last four.

3. It's not a Ben Graham special in my book, but at 12.3 times this year's estimate (presently $1.25), I find it difficult to ignore -- especially since it has the potential to grow its bottom line at a nice clip in the next several years. In addition, analysts are expecting the company to earn $1.49 in 2010, which would imply an expected growth rate of 19.2% from this year to next.

4. On its June 30 balance sheet, it had a little more than $3 billion in cash, equivalents, and short-term investments. Compared to some companies that's not a ton of flash. But it's not half bad, either, and I think it gives it some decent options.

5. Part of me thinks that the 2010 estimate ($1.49) may be slightly conservative given the way the company has been taking out estimates and the fact that the economic picture seems to be clearing.

6. My guess is that a new 52-week high could be just around the corner. I'm not saying if that happens it's going to be the rock star it was a few years back, but it could put it on the radar screens of some potentially new investors.

7. Let's not let the dividend slip our minds. A little flash on the side is always nice.

8. With all that said, I'd like to see a bunch of insiders bellying up to the bar in the open market. That would make me feel even better about the overall situation.

Hey -- have a great day!

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No positions in stocks mentioned.

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