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Why Corning Stock Declined 3.6% in 2019

By Steve Symington - Jan 13, 2020 at 2:39PM

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The glass technologist badly lagged the broader market. Here's why.

What happened

Shares of Corning (GLW 4.51%) declined 3.6% in 2019, according to data from S&P Global Market Intelligence, trailing far behind the S&P 500's impressive 29% gain.

To be fair, the glass-centric tech stock started the year on a high note, rising 15% through the end of February on the heels of its strong fourth-quarter 2018 report. But Corning all but gave up those gains after its subsequent quarterly updates showed headwinds impeding the growth of its core optical communications segment.

Spool of optical fiber with Corning's logo on it.


So what

To be sure, Corning first tempered its optical growth expectations at the end of April, calling for full-year gains of 10% (down from the low teens before) after a "major fiber-to-the home customer" shifted the timing of a large optical deployment. Still, Corning largely reiterated its previous expectations for its remaining display technologies, environmental, life sciences, and specialty materials segments at the time.

Then shares slumped in late July when Corning posted reasonably solid second-quarter 2019 results, but followed by further reducing its expected optical segment growth to be in the low- to mid-single-digit percent range for the year due to carrier customer weakness. 

More recently in September, Corning piled on investors' concerns by not only lowering its outlook for the optical segment yet again -- this time calling for sales to decline 3% to 5% for all of 2019 on lower spending from certain enterprise customers -- but also by slashing expectations for its display technologies segment volume to increase only slightly for the full year (down from guidance for high-single-digit volume growth before).

Now what

As it stands, Corning is now trading roughly flat from where it stood a year ago and around 14% below its 52-week high. But I do think there's reason for optimism surrounding the stock considering the underlying causes for Corning's stalling growth aren't necessarily indicative of a company losing market share to competitors. Rather, they're a function of acting as an industry leader for markets facing headwinds that won't last forever, leaving Corning primed to benefit when those markets eventually, inevitably rebound. That's why, as I wrote last month, Corning management remains confident in its strategy for creating shareholder value over the long term. And I think Corning's depressed stock price will ultimately reflect as much.

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