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What's in Store for Corning (GLW) This Earnings Season?

Corning Inc. GLW is set to report first-quarter 2016 results on Apr 26, before market opens. Last quarter, the company posted a positive earnings surprise of 6.25%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Corning’s fourth-quarter earnings were better than the Zacks Consensus Estimate but revenues missed the same. Revenues also dropped 1.8% sequentially and 7.2% year over year.

The Optical segment was the high point of the quarter, although growth rates went down. Overall, results across segments were negatively impacted by currency and a weakening in the global economy, particularly China. This could continue to have a negative impact on fourth-quarter results.

However, Corning has hedge contracts in place that should boost results in the to-be-reported quarter.

Another key development in the last quarter was the Dow Corning transaction, under which a 40% share of Hemlock Semiconductor was tax efficiently transferred to a wholly owned subsidiary along with some cash. This is expected to have a positive effect on Corning’s upcoming earnings.

Moreover, Corning expects glass volumes to decline mid-to-high single digits sequentially as panel makers cut utilization further. LCD price declines will moderate further. Optical Communications sales are expected to increase by a low-to-mid-single-digit percentage rate year over year, Specialty Materials may decline at a mid-teens percentage rate and Environmental will likely decline 10% due to weakening North American heavy duty truck demand. Life Sciences, however, is likely to increase at a low-single-digit percentage rate.

Earnings Whispers

Our proven model does not conclusively show that Corning will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 28 cents. Hence, the difference is 0.00%.

Zacks Rank: Corning’s Zacks Rank #2 when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

You could consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:

Barracuda Networks, Inc. CUDA, with an Earnings ESP of +200.0% and a Zacks Rank #1. The company is slated to report fourth-quarter fiscal 2016 earnings results on Apr 26

Align Technology Inc. ALGN, with an Earnings ESP of +12.82% and a Zacks Rank #1. The company is set to report first-quarter 2016 earnings results on Apr 28, 2016

Canadian Pacific Railway Limited CP, with an Earnings ESP of +0.48% and a Zacks Rank #1. The company’s second-quarter fiscal 2016 earnings release date is Apr 27, 2016

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CDN PAC RLWY (CP): Free Stock Analysis Report
 
CORNING INC (GLW): Free Stock Analysis Report
 
ALIGN TECH INC (ALGN): Free Stock Analysis Report
 
BARRACUDA NTWRK (CUDA): Free Stock Analysis Report
 
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