EUR 850.00 For Business Accounts Only

Morningstar | Continued focus on innovation will likely support Corning’s growth prospects.

Corning is the leading provider of glass substrates used in liquid-crystal displays, or LCDs, as well as a foremost supplier of fiber-optic cabling and other materials science products. While the display glass business is exposed to the cyclical nature of consumer discretionary spending, we think the firm’s commitment to innovation and its solid capital allocation priorities optimally position the company going forward, and we believe they will drive shareholder value in the long term.Superior products and manufacturing efficiencies have allowed Corning to control nearly half of the glass panel market while generating some of the highest margins in the industry. Corning invests in research and development at slightly more than three times the rate of its peers on average. This investment supports greater profitability and allows Corning to set the pace for innovation in the display glass space. Corning’s ability to continuously innovate has enabled the company to achieve the lowest-cost manufacturing position and earn a higher share of the industry’s profits. For example, Corning is producing larger, thinner, lighter, yet stronger, glass utilizing its patented and innovative manufacturing process, referred to as fusion. In our view, these dynamics give Corning a sustainable cost advantage and a narrow economic moat.We think the company is well-positioned for growth in the optical fiber business, as carriers and data center operators seek to improve network capacity. However, heavy customer concentration along with stiff competition in the optical communications space has resulted in weaker profitability than in the display glass business. Beyond optical, we think Corning’s environmental technologies business stands to benefit from increasingly stringent emissions regulations in the U.S. and European markets, resulting in renewed demand for its filter products. Further, we are optimistic of the growth in Corning’s specialty materials segment as the company expands its leadership position in protective coverings via Gorilla Glass for smartphones and PCs while also extending its presence into adjacent markets such as wearables.