Image source: Corning Incorporated.

Corning Incorporated (NYSE:GLW) released third-quarter 2016 results Tuesday morning, and shares fell almost 4% by the time the market closed. But before we jump to conclusions, let's take a more polished look at what the glass technologist accomplished over the past three months.

Corning's headline numbers

Third-quarter revenue climbed 10.3% year over year, to $2.507 billion. And based on generally accepted accounting principles (GAAP), that translated to 34% growth in net income attributable to Corning, to $284 million, and 73% growth in earnings per diluted share, to $0.26.

On an adjusted (non-GAAP) basis, which adds perspective by accounting for items like foreign currency hedges and acquisition costs, Corning's core earnings grew 4% year over year, to $466 million. Excluding core equity earnings contributions from Dow Corning's silicones business -- the ownership interest of which Corning realigned in a newly formed entity earlier this year -- core earnings increased 16% on a per-share basis, to $0.42. We should also keep in mind per-share earnings were bolstered by repurchases over the past year, including a $2 billion accelerated share repurchase completed during the third quarter.

As I pointed out in my earnings preview earlier this week, Corning doesn't provide specific financial guidance on revenue or earnings. But management did offer some color last quarter on expectations for Corning's operating segments (more on that below), and told investors it would achieve consolidated growth in revenue and earnings per share both on a sequential basis and from last year's third quarter.

In short, Corning delivered just as it said it would. And Corning CEO Wendell Weeks noted as much, stating,

Corning’s strong third-quarter results reflect the increasing momentum that we expected in the second half of this year. Sales and gross margins increased in every business segment year over year. 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.

Even so -- and though we don't typically pay close attention to Wall Street's demands -- these results were technically mixed relative to analysts' expectations; consensus estimates predicted Corning would achieve lower core earnings of $0.38 per share, but on slightly higher revenue of $2.52 billion. 

Digging deeper

Corning also reminded investors of its previously outlined Strategy and Capital Allocation framework, under which it has committed to returning at least $12.5 billion to shareholders through dividends and repurchases, while at the same time investing $10 billion in growth opportunities through research, development, and engineering through 2019. As it stands, Corning is on track to return over $6 billion to shareholders by the end of this year.

On a segment basis, Corning's display technologies business saw revenue increase 1% year over year, to $943 million, while segment core earnings rose 5%, to $270 million. Glass market volume overall increased in the high-single-digit range, which was better than expected, and Corning's glass volume growth remained slightly ahead of that of the overall market. In addition, LCD glass pricing declines remained moderate for the ninth straight quarter, in line with expectations.

Revenue at Corning's optical communications segment grew 6% year over year, to $795 million. Segment core earnings rose a healthier 38% over the same period, to $98 million, driven by improved manufacturing costs and favorable product mix. At the same time, optical growth related to hyper-scale data center sales came in below expectations. Though to be fair, management noted in the subsequent conference call that large hyper-scale data center sales range from $5 million to $10 million apiece, which means delaying even a single project can reduce segment growth by over one percentage point. Over the long term, Corning continues to believe it is well positioned to capitalize on this market.

Next, environmental technologies revenue increased 3% year over year, to $264 million, ahead of guidance thanks to a combination of new platform wins and record sales of light-duty substrates on strong demand in North America, Europe, and China. And at life sciences, revenue rose 1% year over year, to $214 million, while core segment earnings were flat at $21 million. Both figures were in line with Corning's expectations.

Finally, at specialty materials, revenue rose 2% year over year, and 11% sequentially, to $295 million, while segment core earnings remained flat at around $44 million. Both the top and bottom lines here were well ahead of expectations, even as net income for the segment was negatively affected by ramp-up costs related to the launch of new products, including Gorilla Glass 5 and Gorilla Glass SR+. 

Looking forward

For the current (fourth) quarter, Corning anticipates panel-maker utilization of display glass to remain high. Display glass volume should be consistent to down slightly on a sequential basis from Q3, while LCD glass price declines should continue to moderate. Fourth-quarter revenue at optical communications should be up in the high-single digits from the same year-ago period, driven by continued strength in fiber-to-the-home solutions. At environmental technologies, current-quarter revenue will likely decline in the low-single digits, driven by weakness in the heavy-duty truck markets. And thanks to new design wins and volume growth for Gorilla Glass sales, specialty materials revenue is expected to climb in the high-single digits from last year, while profitability should improve with the majority of new product launch costs now in the rear view mirror.

On a consolidated basis, Corning anticipates a "strong" fourth quarter during which it should continue to build momentum, and once again deliver year-over-year growth in both sales and earnings per share. Core gross margin should also remain roughly steady from this quarter, at around 43%. All the while, Corning will continue to execute -- and investors will enjoy the benefits of -- its ambitious strategy and capital allocation framework.

In the end, while results may have been mixed relative to expectations, Corning has never been a company to bend to the near-term oriented will of analysts as it strives to consistently generate value for patient, long-term shareholders. With that in mind, there was little not to like about this quarter, and I think Corning is right to be more than pleased with its current position.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.