The past few weeks were pretty busy in terms of my daily job, but I’ve wanted to start a new post series about stock analyzing for quite a while. My idea would be to share some info about the company in question, run some numbers with you and talk with you if it’s worthy to own. Let’s start with Corning Inc (stock ticker: GLW), as it got traction in the past decade and it’s now a brand that many recognize.
Apart from raw statistics and financial details, I’ll do my best to share with you more about the company itself and the products they offer. I personally base my stock ownership decisions on a broader set of factors, so there will be a lot more than numbers.
Corning Inc: The company, products, history
Corning Incorporated was originally founded as Corning Glass Works in 1851 in Massachusets, according to Wikipedia. A few years afterward the company moved to New York, which is still home to Corning. In 1989 the company changed its name to Corning Inc, as it is today.
When we’re deciding if a company is worth owning, it’s good to look deeper than just the balance sheet and raw numbers. If a particular portion of the business of the company sinks down for some reason, this company will rely on revenue coming from its other products. That’s a good way to reassure yourself that your investment might keep most of its value even during the market conditions we have today.
With Corning Inc, we have a variety of products apart from the well known Gorilla Glass. If you visit their website, you will discover that they offer products dedicated to different industries. There are Life Sciences, Pharmaceuticals, Optics, Communications, Display Glass, and Environmental solutions.
Financial parameters as of November 2020 – What I like and what I do not like
| Market cap | $27.9B |
| P/E Ratio | 27.09 |
| Price-to-Book Ratio | 2.63 |
| P/E * Price-to-Book | 71.2 |
| Current Ratio | 2.03 |
| Dividend Yield % | $2.42 |
| EPS | $0.24 YoY for the past 12 months |
What do I like about these numbers?
Corning Inc paid dividends for the past 30 years without cutting it off at any point. The payout is climbing up since 2007 at a decent pace. This means that there’s a high possibility for the dividends to continue growing in the future as well.
The Current Ratio also looks pretty good. For a healthy company, I consider the Current Ratio anything above 1. Here we have it double, which is a very good signal.
The market cap of almost $28B places Corning Incorporated among the top among its competitors. This is also a good signal, taking into account that the company is investing in R&D and will supposedly continue to grow as well.
What I don’t like about these numbers?
The P/E Ratio is on the higher end of the spectrum. I’d prefer it around 15. Such a high P/E ratio signals that the stock might be overpriced.
The Price-to-Book ratio is higher than I’d like as well. It currently is 2.63, while I’d prefer it no more than 1.5.
The multiplied value of these two exceeds 22.5 as well. That metric is suggested by Benjamin Graham in his book The Intelligent Investor, for which I wrote a review in the blog recently. In our case, this metric is equal to more than 70, which signals for an overpriced stock taking into account its real value.
EPS is also on the lower side and going down for the past year and a half.
Final thoughts: Should you own Corning Inc’s stock?
On the plus side, Corning Inc sounds like a very good investment. Their revenue is climbing year-over-year with almost no exceptions. The company deals very well with debt and the dividend increases since 2007. It seems like if you put your money there today, you have a good chance of earning a decent amount of money in the long term.
From the opposite side, there are certain issues with buying the stock today. It just seems a bit overvalued. The P/E and Price-to-Book ratios are signaling an overvalued stock. That might change in the future and the price of the stock may decrease, making it a great deal.
So, should you own the stock? If you’re looking for a long-term investment and the price doesn’t bother you, Corning Inc seems like a good buy. However, if you are looking for the best value for your money, then I’d suggest you can wait.
In any case, do your own research before making your decision to purchase any stock. The market is very dynamic and things can change overnight.
