Corning Shares Dropped: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of specialty glass giant Corning (NYS: GLW) plunged 11% on Tuesday after slashing its fourth-quarter profit forecast.
So what: Corning's cut was so nasty -- it now sees a 30% drop in earnings versus its initial guidance of just a 5% drop -- that analysts are being forced to seriously lower their valuation estimates. Management cited lower glass prices, a contract loss with a major South Korean customer, and weak demand for cover glass used in tablet computers as reasons for the revision, suggesting that Corning has plenty of trends working against it.
Now what: Buy-and-hold investors should look into this pullback as a possible entry point. "While we are clearly facing some headwinds this quarter, we are not changing our long-term growth expectations," the company said. "Our goal to grow company sales to $10 billion is still well on track with all of our segments growing." With Corning trading at a clear P/E discount to rivals like 3M (NYS: MMM) and TE Connectivity (NYS: TEL) , going for that growth seems like a smart move.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Corning and 3M, as well as creating a diagonal call position in 3M. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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