Corning (GLW)

Glass and electronic component manufacturer Corning (NYSE:GLW) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 20.9% year on year to $4.1 billion. The company expects next quarter’s revenue to be around $4.35 billion, coming in 5.3% above analysts’ estimates. Its non-GAAP profit of $0.67 per share was in line with analysts’ consensus estimates.

Company Overview

Supplying windows for some of the United States’s earliest spacecraft, Corning (NYSE:GLW) provides glass and other electronic components for the consumer electronics, telecommunications, automotive, and healthcare industries.

Like many equipment and component manufacturers, electronic components companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include data centers and telecommunications, which can benefit companies whose optical and transceiver offerings fit those markets. But like the broader industrials sector, these companies are also at the whim of economic cycles. Consumer spending, for example, can greatly impact these companies’ volumes.

Competitors offering similar products include TE Connectivity (NYSE:TE), Asahi Glass (TSE:5201), and Schott AG (private).

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Corning grew its sales at a mediocre 7% compounded annual growth rate. This was below our standard for the industrials sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Corning’s annualized revenue growth of 7.8% over the last two years aligns with its five-year trend, suggesting its demand was stable. We also think Corning’s recent performance stands out as many other Electronic Components businesses have faced declining sales because of cyclical headwinds.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Optical Communications and Display Technologies, which are 40.3% and 22.9% of revenue. Over the last two years, Corning’s Optical Communications revenue (optical fiber & cables) averaged 21.1% year-on-year growth while its Display Technologies revenue (glass for flat panel displays) averaged 4.4% growth.

This quarter, Corning’s year-on-year revenue growth of 20.9% was excellent, and its $4.1 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 24.3% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 11.9% over the next 12 months, an improvement versus the last two years. This projection is particularly noteworthy for a company of its scale and suggests its newer products and services will fuel better top-line performance.

For industrials businesses, cost of sales is usually comprised of the direct labor, raw materials, and supplies needed to offer a product or service. These costs can be impacted by inflation and supply chain dynamics in the short term and a company’s purchasing power and scale over the long term.

Corning’s gross margin is good compared to other industrials businesses and signals it sells differentiated products, not commodities. As you can see below, it averaged an impressive 35% gross margin over the last five years. That means for every $100 in revenue, roughly $35.05 was left to spend on selling, marketing, R&D, and general administrative overhead.

Corning’s gross profit margin came in at 37.1% this quarter, marking a 2.2 percentage point increase from 34.9% in the same quarter last year. Corning’s full-year margin has also been trending up over the past 12 months, increasing by 2.9 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Corning has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 11.1%. This result isn’t too surprising as its gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Corning’s operating margin decreased by 2.1 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q3, Corning generated an operating margin profit margin of 14.4%, up 5.5 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Corning’s EPS grew at a remarkable 12.2% compounded annual growth rate over the last five years, higher than its 7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Corning’s earnings to better understand the drivers of its performance. A five-year view shows that Corning has repurchased its stock, shrinking its share count by 2.4%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Corning, its two-year annual EPS growth of 15.6% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Corning reported adjusted EPS of $0.67, up from $0.54 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Corning’s full-year EPS of $2.38 to grow 16.3%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Corning has shown impressive cash profitability, enabling it to ride out cyclical downturns more easily while maintaining its investments in new and existing offerings. The company’s free cash flow margin averaged 9.4% over the last five years, better than the broader industrials sector.

Taking a step back, we can see that Corning’s margin dropped by 4.4 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

Corning’s free cash flow clocked in at $450 million in Q3, equivalent to a 11% margin. The company’s cash profitability regressed as it was 5.3 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t read too much into this quarter’s decline because capital expenditures can be seasonal and companies often stockpile inventory in anticipation of higher demand, causing short-term swings. Long-term trends trump temporary fluctuations.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Corning historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.5%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Corning’s ROIC averaged 2.5 percentage point decreases over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Corning reported $1.65 billion of cash and $8.22 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $4.05 billion of EBITDA over the last 12 months, we view Corning’s 1.6× net-debt-to-EBITDA ratio as safe. We also see its $146 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were also glad its revenue guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its and its EBITDA fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 5.5% to $84.44 immediately following the results.

Updated: December 3, 2025 at 10:38 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

Corning isn’t a terrible business, but it doesn’t pass our quality test. Although its revenue growth was decent over the last five years and is expected to accelerate over the next 12 months, its cash profitability fell over the last five years. And while the company’s projected EPS for the next year implies the company’s fundamentals will improve, the downside is its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Corning’s P/E ratio based on the next 12 months is 28.4x. Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $93.31 on the company (compared to the current share price of $83.52).