What's In Store For Corning (GLW) This Earnings Season?

Corning Inc. (NYSE:GLW) is set to report second-quarter 2016 results on Jul 27, before the market opens. Last quarter, the company’s earnings matched the Zacks Consensus Estimate.

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

Factors to Consider

Corning’s first-quarter earnings were in-line with the Zacks Consensus Estimate. However, revenues missed by only a small margin. Revenues also dropped 8.2% sequentially and 9.6% year over year.

In the first quarter, Corning’s sales in Display, Environmental, Specialty Materials and Life Sciences were met or exceeded expectations. While strong demand was observed in the Optical Communications segment, deployment issues with new manufacturing software interrupted the company’s cabling production and posed a problem to fulfilling customer orders. This had a substantial effect on the company’s revenues.

Corning’s management is upbeat on the sequential growth that’s showing up across its various business verticals. Management’s capital allocation plans also remain on track.

Going into the second quarter, Corning expects sequential sales growth in all of its business segments, except Environmental, which it expects will underperform slightly.

Optical Communications: The company expects sales to grow more than 20% on a sequential basis. It expects moderate decline in LCD glass prices in the second quarter compared with the first quarter as the market conditions are more stable.

Environmental: Corning expects strong demand in the auto market. However, given the weak demand for heavy trucks in North America and China, which is likely to continue in the coming quarters, Corning expects sales to be flat year over year.

Speciality Materials: Gorilla Glass volume is expected to grow on both sequential and year-over-year basis. Corning expects low single digit growth in this segment compared with the same quarter a year ago.

Life Sciences: Despite some headwinds due to a weaker euro, Corning expects to post single digit growth in this segment on a year-over-year basis.

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 32 cents. Hence, the difference is 0.00%.

Zacks Rank: Corning’s Zacks Rank #1 when combined with a 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

One can consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank instead:

Bruker Corp. (NASDAQ:BRKR) , with an Earnings ESP of +5.26% and a Zacks Rank #1. The company is slated to report second-quarter 2016 earnings on Aug 2.

Open Text Corp. (NASDAQ:OTEX) , with an Earnings ESP of +1.10% and a Zacks Rank #1. The company is set to report fourth-quarter fiscal 2016 earnings results on Jul 27, 2016

LG Display Co., Ltd. (NYSE:LPL) , with an Earnings ESP of +50.00% and a Zacks Rank #2. The company’s second-quarter 2016 earnings release date is Jul 27, 2016.