Corning (NYSE:GLW) is slated to announce fourth-quarter 2018 results on Tuesday, Jan. 29, 2019. Shares of the glass technologist are down modestly from its exceptional third-quarter report in October as of this writing -- albeit primarily driven by the broader market's decline since then.

To be clear, last quarter Corning demonstrated accelerating growth and expanding margins as its investments in innovation and manufacturing capacity began to yield fruit. And if management's commentary is any indication, shareholders should expect to see more of the same next week. Before Corning's Q4 results hit the wires, then, let's have a look at what investors should be watching.

Multiple panes of Corning glass.


A "step change" in profitability

Three months ago, Corning Chairman and CEO Wendell Weeks boasted that Q3 marked a "step change in our earnings power," particularly as Corning leveraged its "recent phase of intense operating and capital investments to capture substantial benefits."

Remember, Corning is in the home stretch of its four-year Strategic and Capital Allocation Framework announced in late 2015. Under that framework as of the end of last quarter, the company had already returned $11.4 billion (of a $12.5 billion goal) to shareholders through dividends and repurchases, and remained on track to invest $10 billion back into the business to solidify its industry leadership and capture future growth. Next week, the market will expect the company to confirm it has continued to make notable progress toward those goals, as per usual. But shareholders should also listen closely for any updates regarding Corning's targets for the duration of this year, as well as potential plans to extend its framework at the end of 2019.

As for this quarter's headline numbers, Corning's latest guidance calls for full-year 2018 sales to "exceed $11.3 billion." Based on its sales of $8.255 billion through the first nine months of the year, that means the fourth quarter should arrive (conservatively) at around $3.05 billion. Meanwhile, Corning does not provide specific consolidated bottom-line guidance. So for perspective, and though we usually don't lend much credence to Wall Street's expectations, most analysts will be looking for Corning's core earnings to increase roughly 14% to $0.57 per share.

Breaking it down

Corning did offer some broad expectations in October for each of its five primary segments to end the year.

At optical communications, its single largest business, fourth-quarter sales should climb in the low-single-digit percent range sequentially, from $1.117 billion last quarter, helped by large ongoing projects from multiple carrier and data center customers. All told, that should mean optical achieves slightly higher year-over-year growth than the 9% increase we saw in Q3.

Next, Corning's display technologies segment should benefit from ever-larger television screen sizes. Coupled with the recent ramp of Corning's Gen 10.5 LCD glass substrate facility in China, display technologies should see volume growth slightly above the low-single-digit sequential increase expected from the broader display glass market. At the same time, its revenue and earnings benefit for this segment will be held back by continued annual display glass price declines -- though it's worth noting Corning has done an admirable job moderating those declines in recent years.

Similarly, life sciences revenue (think laboratory equipment) should climb in the low- to mid-single-digit percent range, outpacing increases for the broader life sciences market. And sales at Corning's environmental technologies segment should climb in the high single-digit percent range from last year, driven by manufacturing efficiencies and sustained demand for Corning's automotive ceramic substrates and gasoline particulate filters. 

In the meantime, Corning believes its specialty materials sales will be roughly flat against a particularly strong year-ago period. Recall last quarter Corning saw specialty materials sales soar a better-than-expected 23% year over year, thanks to demand from OEMs for its latest Gorilla Glass products to support various second-half product releases. Still, I'll be watching for updates on whether OEMs have continued to embrace Corning's Gorilla Glass 6 innovation, which was only just unveiled in July.

Looking ahead

Finally, Corning management should offer some color on its goals for 2019, whether it relates to its Strategic and Capital Allocation Framework or trends for core sales growth and margin expansion. In any case, assuming Corning meets its current guidance for all of 2018, most analysts watching the stock are modeling similar 7% top-line growth for the coming year. If Corning can continue leveraging that growth to further improve profitability and bolster capital returns, it should give patient investors more than enough reason to cheer.

Check out the latest Corning earnings call transcript.

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