Corning (GLW) Shares Are Set To Grow

Corning (NYSE:GLW) shares spiked to the highest level of last 52-weeks, thanks to its improving future fundamentals. In addition, the company’s smart capital allocation and portfolio moves are also adding to investor’s confidence. GLW stock price surged 6.5% in the last month alone, extending year-to-date rally to 32%. According to its capital allocation strategy, the company is looking to return at least $12.5 billion to stockholders through 2019, while investing $10 billion in growth opportunities.

In addition, Corning focuses 80% of its portfolio on key four manufacturing and engineering platforms, three core technologies, and five market-access platforms. According to this strategy, the company would be able to reduce the cost of innovation, attracts some of the world’s leading companies to its ecosystem and increases their likelihood of success.

The company’s business strategies are working considering its recent strong performances. In the latest quarter, the company has beaten revenue and earnings estimate by a wide margin. GLW’s sales increased 4.5% to $2.55 billion compared with the same period last year. In addition, its cost cuttings and investments in higher margin areas are also driving strong growth in earnings. The company’s earnings per share surged to $0.42 in the third quarter this year, representing a growth of 24% Y/Y, and an increase of 14% Q/Q.

“Sales and gross margins increased in every business segment year over year,” says Wendell P. Weeks, Corning CEO. “We also grew the company’s sales, core earnings and core EPS both sequentially and year over year. Our operating results and progress on key growth initiatives continue to reinforce our confidence in Corning’s strategy.”

The company looks to be in a very strong position to invest in growth opportunities. Corning’s is looking to distribute $6 billion to shareholders by the end of 2016 due to its realigned interest in Dow Corning.

Consequently, the company is looking to launch $2 billion accelerated share repurchase, which will enhance its dividends and earnings per share. In addition, it is looking to invest cash in significant new product introductions, and progress on several of its new growth initiatives, including mobile consumer electronics market-access platform, automotive market-access platform and Optical Communications market-access platform. Overall, Corning’s stock price has further upside potential considering its strong financial results and potential to invest in growth opportunities.

The author does not have any positions in the above mentioned companies.

Alexander is an analyst for who specializes in index and commodity trading. His outlook is usually near-term to medium-term. He has over 10 years of experience in the financial industry and began his career at the dealing desk. Alexander holds a Bachelor’s degree in Economics from University of Delaware.