Glassware veteran Corning (GLW +0.80%) has fallen on hard times lately. Is it time to give up on the stock, or will Corning have a banana and a comeback?
The stock has lost 18% of its value in just over a month. The slide was punctuated by a solid third-quarter report, paired with very cautious forward guidance. Enormous glass fiber customers AT&T (T 0.39%) and Verizon (VZ 2.15%) aren't building their networks as quickly as Corning would like, and even smartphone builders are holding back on Gorilla Glass orders for the holidays.
Corning does have its fair share of real problems. Trailing sales have pretty much flatlined over the last year as consumers and infrastructure builders alike took their feet off the glassware order accelerator. GAAP earnings plunged 28%.
But all of these concerns are obviously short-term in nature. Corning is actually very strong where it matters most:
GLW Free Cash Flow TTM data by YCharts.
The line of this chart that really matters to Foolish investors is the blue one. Corning's taxable earnings may be on the decline, but the company is generating wheelbarrows of cash.
Most notably, Corning is a two-way play on the mobile computing revolution. The obvious angle is Gorilla Glass, the thin but strong glass panel covering the best smartphones of every brand. The Apple (AAPL +0.00%) iPhone 5 owes some of its slimmer shape to the new Gorilla Glass 2 panels. Nokia (NOK 0.94%) proudly covers every smartphone in Corning glass. So do Samsung and LG, and the list goes on.
Marketing imagery for Gorilla Glass 2 -- an apt metaphor for Corning itself. Source: Corning.
So Corning is an obvious winner no matter who takes the cake in the smartphone wars. There aren't many stocks that meet that description.
Second, smartphones and tablets are no fun without high-speed network connections. Corning invented fiber-optic cables and remains a leading supplier of this crucial backbone material. Yes, even wireless towers connect back to the main Internet via fiber optics.
You simply can't convince me that both the infrastructure and consumer-side halves of the mobile data market have stopped growing forever. Telecoms and device builders will come back eventually, and Corning will soar when they do.
That's why I started a bullish CAPScall on Corning last month. You just can't keep a beautiful gorilla down for very long.
