Corning Inc. (GLW) surprised on estimates for the second quarter by 30% as LCD tv sales remain strong. The company recently restarted some idled plants to meet glass demand. GLW trades with a forward P/E of 14.2.

Company Description

Corning is a specialty glass, ceramics and optical fiber manufacturer. It produces glass for LCD flat panel televisions and laptops, ceramic substrates and filters for mobile emission control systems, cable for Internet communication networks and advanced optics and specialty glass for various industries.

Corning Surprised by 30% for the Second Quarter

On July 27, Corning announced second quarter results that surprised on estimates by 9 cents. Earnings per share were 39 cents compared to the Zacks Consensus Estimate of 30 cents.

Sales fell 18% to $1.4 billion from $1.7 billion in the year ago period. However, the company did see a 41% improvement in sales from the first quarter.

LCD television sales contributed to the revenue growth as sales in the Display Technologies segment rose 89% from the first quarter. The Telecommunications segment increased 14% from the first quarter as there was strong demand for optical fiber and cable in China.

The Environmental Technologies segment increased sales 20% mainly due to improved automotive product sales in Germany, China and the US. Government incentive programs designed to sell cars added to the sales increases in Germany and China in the quarter.

As demand for LCDs stayed strong, Corning initially met demand from its own inventories but as that was depleted, the company restarted some idled glass melting capacity to meet the demand. Glass volume increased by 101% at Corning’s wholly owned business and by 50% at Sumsung Corning Precision quarter over quarter.

Impact of Recession Is Moderating

Corning is optimistic about the second half of the year given the turnaround in the second quarter.

“As we enter the second half of the year, we are seeing signs that the impact of the global recession on our businesses may be moderating,” said James B. Flaws, vice chairman and chief financial officer.

“That said, questions pertaining to the pace of economic recovery remain. While we do not currently believe another corporate-wide downsizing will be necessary, we are looking at specific business unit restructuring needs.”

“We don’t expect the global auto industry and U.S. truck market to rebound quickly. As a result, we are evaluating further cost reductions in our Environmental Technologies segment later this quarter, which may result in restructuring charges in the back half of the year,” he added.

The company increased its forecast for LCD glass market volume for the year to around 2.3 billion square feet or about 15% growth over 2008 due to the strong sales of LCD TVs in the first half of the year.

Consensus Estimates Rise

Covering analysts are just as bullish about the rest of 2009 as Corning.

The third-quarter Zacks Consensus Estimate rose 3 cents to 37 cents in the last month. The full-year Zacks Consensus Estimate jumped 13 cents to $1.17 per share in the last month with 13 out of 16 covering analysts raising.

Value Fundamentals

Corning is a Zacks #1 Rank (strong buy) stock. It has a price-to-book of 1.86. The company has a stellar 5-year average return on equity (ROE) of 22.34%.

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