Corning Inc. (GLW) recently reported second-quarter earnings of 39 cents per share, eclipsing the Zacks Consensus Estimate by 30%. Sales of $1.4 billion topped the previous quarter’s total by 41% and came in 18% below the year-prior result.

Company Description

Corning makes specialty glass and ceramics. The creates components that enable high-technology systems for consumer electronics, mobile emissions control, telecommunications and life sciences.

Corning’s products include glass substrates for LCD televisions, computer monitors and laptops; ceramic substrates and filters for mobile emission control systems; optical fiber, cable, hardware & equipment for telecommunications networks; optical biosensors for drug discovery; and other advanced optics and specialty glass solutions for a number of industries including semiconductor, aerospace, defense, astronomy and metrology.

Solid Quarterly Results

Corning, which was the subject of a recent analyst upgrade, reported second-quarter results in late July. Earnings per share of 39 cents eclipsed the Zacks Consensus Estimate by 30%.

Sales of $1.4 billion topped the previous quarter’s total by 41% and came in 18% below the year-prior result.

“The resurgent demand for LCD glass is propelling us to restore much of our previously idled production capacity as quickly as possible to meet our customers’ needs,” said James B. Flaws, vice chairman and chief financial officer. “Approximately 40% of our second-quarter shipments came from existing inventory. We need to- and have- restarted tanks to replace this inventory drawdown to meet third-quarter demand. We believe our third-quarter glass shipments will be flat to up slightly, compared to the very strong second-quarter level.”

A few weeks after reporting, the company announced that there was a production disruption due to an earthquake at its LCD glass manufacturing facility in Shizuoka, Japan. Management said that this will result in lower glass volume for the third quarter, but should not have a material impact on fourth-quarter shipments. GLW promised to provide updates on any significant changes to this outlook.

Bullish Forecasts

Analysts polled by Zacks are upbeat on GLW’s earnings. The current year Zacks Consensus Estimate of $1.18 per share is a penny above last week’s forecast and 12 cents higher than last month’s projection.

For 2010, the Zacks Consensus Estimate of $1.48 tops last week’s $1.46 and the month-prior $1.36.

Favorable Industry Comparisons

Corning boasts a return on equity (ROE) of 13%, well ahead of the industry average of 1%. Corning’s net profit margin of 33% compares favorably to a negative industry average. The Growth and Income pick also pays an industry-leading dividend yield of 1.3%.

Zacks Investment Research
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