Corning Incorporated (GLW -0.10%) announced second-quarter 2017 results on Wednesday morning, easily beating expectations on both the top and bottom lines, thanks to strong showings from both its optical communications and specialty materials segments.

But with shares down more than 5% today -- yet still up more than 40% over the past year -- let's dig deeper to see how Corning capped the first half of 2017, as well as what investors can expect from the glass technologist going forward.

Spool of Corning optical fiber

Image source: Corning.

On Corning's headline numbers

Quarterly core sales increased 6.1% year over year to $2.59 billion, and core earnings declined 0.7% to $431 million. Thanks to ambitious share repurchases over the past year (more on that below), however, core earnings per share increased 13.5% to $0.42. 

Keep in mind that Corning doesn't provide specific consolidated financial guidance. So while we don't pay close attention to Wall Street's demands, consensus estimates predicted Corning would report lower core earnings of $0.40 per share on revenue of just $2.54 billion.

"We are very pleased with our first-half performance and we remain on track to achieve our Strategy and Capital Allocation Framework goals," stated Corning chairman and CEO Wendell Weeks. "Our focused and cohesive portfolio continues to deliver innovative solutions that help our customers address their toughest challenges."

To be sure, Corning returned almost $800 million to shareholders during the quarter through dividends and share repurchases. All told, since late 2015 when it outlined a goal of reaching $12.5 billion by 2019 under an ongoing strategic capital allocation framework, Corning has returned $7.4 billion to shareholders.

Corning also reiterated its target of investing $10 billion in the business to sustain its industry leadership by fostering future growth opportunities. Among the latest fruits of these investments is Corning Valor Glass, a recently unveiled pharmaceutical packaging solution Corning developed through a partnership with Merck and Pfizer.

Digging deeper

On a segment basis, display technologies core sales fell 4% year over year to $841 million, while segment core earnings rose 1% to $240 million. Underlying that top-line performance was low-single-digit percentage growth in both the LCD glass market and Corning's volume -- just as Corning promised last quarter -- and continued moderation in LCD glass price declines.

Next, optical communications revenue climbed 13% year over year to $882 million. That's above last quarter's guidance for roughly 10% growth, and it helped optical finally exceed display technologies' sales on continued strong demand in the North American fiber-to-the-home market. Optical core earnings simultaneously rose 26% to $108 million.

On another positive note, environmental technologies' sales rose a modest 2% year over year to $263 million, above guidance for a roughly flat year-over-year performance. For that, investors can thank both global growth in the automotive market and new business wins.

Similarly, life sciences revenue rose 3% year over year to $221 million, in line with guidance for low-single-digit growth, while segment core earnings declined 10% to $19 million. During the subsequent conference call, management clarified that Valor Glass will not be categorized under the life sciences segment for now, but rather will be included in the smaller "other" reporting segment, along with other early-stage opportunities.

Last but not least, Corning's specialty materials segment revenue grew 27% year over year to $337 million -- also well ahead of guidance for high-teens percent growth -- driven by stronger Gorilla Glass shipments in support of new product launches. Gorilla Glass 5 demonstrated particular strength and can now be found as the protective cover glass of choice for 22 devices.

"We had record shipments of Gorilla Glass," added Corning CFO Tony Tripeny, "and expect strong demand to continue for the remainder of the year."

Looking forward

To that end, Corning offered fresh color on its expectations for each segment going forward.

First, the display technologies segment should benefit in the current quarter from continued low-single-digit growth in both the LCD glass market and Corning's volumes. But it will also be offset by similar moderation in LCD glass price declines, as we saw in the second quarter. Tripeny insisted the company remains "very pleased with the current dynamics in our display business and our progress in stabilizing returns."

Meanwhile, Tripeny teased that optical sales "have the potential to be up mid-teens for the full year like many sell-side analysts are modeling." At the same time -- and this is likely one primary source of today's pullback -- Corning management opted to take a more cautious approach to guidance, considering sales are often driven by large civil works projects, which can result in chunky revenue trends. As such, Corning called for third-quarter optical sales to be up at least 10%.

Next, Corning sees low-single-digit sales growth from its environmental technologies business in the current quarter, with sales for the full year expected to be in the range of flat to up slightly from 2016. And at life sciences, Corning reiterated its expectation for low-single-digit sales growth for both the third quarter and the full year.

Finally, Corning called for specialty materials sales to be up in the low- to mid-teens percent range from last year's third quarter, with the usual caveat that sales growth in this budding segment depends largely on the timing and number of new product launches that feature Corning's popular specialty glass solutions.

In the end, giving all due credit to Corning's overall out-performance this quarter, it appears the only qualm the market should have with Corning's report is that of its conservative outlook for its now-largest segment: optical communications. But even then, management was forthright in noting their guidance was purposefully conservative, strongly hinting that optical sales could outperform this year when all is said and done. With that in mind, and contrary to the market's reaction today, I think long-term investors should be more than happy with Corning's position right now.