Shares of Corning (NYSE:GLW) fell nearly 6% on Jan. 30 after the specialty glass and ceramics maker reported its fourth quarter earnings. That drop was surprising, since Corning's top and bottom line figures easily beat analyst estimates.

Its core revenue rose 7% annually to $2.74 billion, marking its strongest growth rate in three quarters and topping expectations by $90 million. Its core EPS slipped 2% to $0.49 per share, but still beat estimates by two cents.

Two Corning employees test a sheet of Gorilla Glass.

Image source: Corning.

So should investors consider Corning's post-earnings dip to be a good buying opportunity? Let's dig deeper into its fourth-quarter report to decide.

First, the good news...

Most of Corning's core businesses posted solid top-line growth during the quarter.

Its Optical Communications revenue rose 13% annually to $928 million, thanks to big deals with service providers Verizon and Saudi Telecom, the acquisitions of SpiderCloud and 3M's (NYSE:MMM) Communications Markets division, and the ongoing expansion of its manufacturing capacity. Corning CEO Wendell Weeks still expects the Optical unit, which generated $3.5 billion in sales in 2017, to grow "more than twice as fast as the communications infrastructure market" and hit $5 billion in sales by 2020.

The iPhone X.

The iPhone X. Image source: Apple.

Its Specialty Materials revenue rose 17% to $393 million, supported by robust demand for its chemically hardened Gorilla Glass in consumer electronics.

Corning has been upgrading Gorilla Glass with tougher versions, like Gorilla Glass 5, and introducing new versions for wearables, augmented reality devices, and cars. Weeks expects sales of Gorilla Glass for consumer electronics to double "over the next several years," and believes that the auto market represents a "significant growth opportunity."

Corning's Environmental Technologies revenue rose 19% to $291 million thanks to strong demand for its gas particulate filters, which automakers need to meet more stringent emissions standards. Its Life Sciences revenue grew 9% to $225 million thanks to the growing adoption of Valor Glass, which reduces particle contamination, breaks, and cracks, and boosts throughput, by major pharmaceutical companies.

Now, the bad news...

Corning's Display Technologies business was once again the weakest link, as its revenues dropped 10% annually to $745 million on cyclically soft demand for LCD screens. Corning expects LCD glass pricing to slightly improve in 2018, with year-over-year price drops in the "mid-single digit percentages."

A Corning employee holds an LCD screen.

Image source: Corning.

On the bottom line, Corning's businesses posted inconsistent results. Core earnings at the Display Technologies and Optical Communications businesses fell year-over-year, but those declines were partly offset by annual gains at its Specialty Materials, Environmental Technologies, and Life Sciences units.

Corning also took a one-time charge of $1.8 billion due to tax law changes, which caused it to post a GAAP net loss of $1.4 billion -- compared to a profit of $1.6 billion in the prior-year quarter. However, its core (non-GAAP) earnings, which exclude that charge, still slipped 9% annually as the margin pressures in the Display and Optical businesses offset the core earnings growth of its other three businesses.

Is the bad news that bad?

The LCD market remains a sore spot for Corning, but a gradual recovery in the TV market and decelerating price declines should lead to better year-over-year comparisons in 2018.

Meanwhile, Corning expects the acquisition of 3M's communications unit to add about $400 million in annual sales to its Optical unit, and to lift its fiscal 2019 earnings by $0.07 to $0.09 per share. Therefore, the increased scale of the Optical unit could alleviate the current margin pressures.

Analysts still expect Corning's revenue to rise 3% this year, and for its core earnings -- lifted by buybacks -- to grow 2%. Those aren't stunning growth figures, but they indicate that Corning's strengths will continue to outweigh its weaknesses. The stock also isn't expensive at 18 times its 2018 earnings estimate, and it pays a decent forward yield of 1.8%.

So should you buy the dip?

On the surface, Corning appears to be a slow-growth stock. However, its smaller growth engines -- especially Specialty Materials and Environmental Technologies -- have plenty of tailwinds, which could help them keep delivering double-digit sales growth.

Over time, those businesses will grow in importance and offset the weakness of older businesses like Display Technologies. Therefore I think Corning is still a good long-term investment for any investor who wants simultaneous exposure to tougher and sleeker mobile devices, optical network upgrades, cleaner and better-protected vehicles, and next-gen lab equipment.

 

Leo Sun owns shares of Corning. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends 3M and Corning. The Motley Fool has a disclosure policy.