Anyone have any thoughts on this company? Trading at .9x book, 8x earnings, is cash flow positive. Only downside seems to be plastic screens replacing glass on TVs and cell phones.
looked at this thing 6 months ago…quantitatively cheap but here are the issues (at least the ones i identified):
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concentration of consumers (basically there is 3) - one i believe already decided to pull out and renegotiate
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highly dependent on one product (glass, guerilla) while other profit lines are unprofitable
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mgt guided volumes/earnings downward due to lower demand for their glass products (perhaps due to higher use of plastic) or moving to other competitors…
stock is cheap but may get cheaper as volumes may not overshoot for some time…
your thoughts…
ya, whenever the metrics are cheap…there are usually underlying reasons.
My opinion would be to do a detailed analysis of some of the points raised by FrankA and see if your projections based on their effect gives you a valuation which still provides a margin of safety.
Does that make sense? Allot of work before you come to a conclusion i know, but i think it’s necessary before bieng able to make an educated decision.
corning is really a technology company, recently they made “bendable” glass which might gain traction going forward…what concerns me more is the fact there are at least 3 other glass makers i know of which is contending to get into the mobile phone glass/plastic space…the valuation is simply saying that earnings are headed downwards (as management guided) so when you take that into consideraton, the stock is not as cheap on a P/E, P/CF basis…they are however industry leading but relying on a semi-commodity product is risky unless you know something material about the product here (which i don’t)…
Frank,
Those are some interesting points. What would be interesting to see is whether or not plastic screens would affect the quality of Apple’s retina displays, since it’s pretty much a known fact that Corning supplies the majority of their glass. Even though displays are their main source of revenue, I think Corning can leverage other verticals such as their fiber optics segment. This company has been around for a quite some time and its current valuation seems too attractive to ignore.
valuation definitely looks attractive (at least on historical basis)…i just don’t know enough about it to have much conviction but that can change as i learn more…let me know if you have any other insight…i have read their annuals and usually if i don’t get a clear picture of the company after that, i move on…