With shares of Corning Incorporated (NYSE:GLW) down 6% since the company announced earnings last month, investors can't help but wonder if this is the right time to buy. To be sure, Corning undoubtedly still has challenges to overcome. At the same time, however, there's plenty to like about the glass maker right now.
There are no guarantees in the fast-changing world of tech, but here are three reasons Corning's stock could rise from here.
Consumers are buying larger TVs
Corning's single biggest segment is Display Technologies, which drove $1.1 billion in revenue last quarter, or 43% of all sales. That most notably includes sales of LCD glass, the price for which has steadily fallen over the past several quarters. However, those price declines have slowed considerably, prompting Corning management to say they're "delighted" with the LCD glass market.
But moderating price declines aren't the only reason Corning is happy. According to Corning CFO Jim Flaws, increased affordability also means the "trend of consumers buying larger televisions has continued." As a result, Flaws says, Corning now sees average screen sizes increasing 3% through 2015, with "robust [...] growth beyond 2015 driven by ultra high definition television penetration, which favors large sized televisions."
That growth isn't exactly overwhelming, but over the long term, it represents a predictable, profitable stream of business for Corning.
Gorilla Glass is still (almost) everywhere
At the same time, many investors are concerned about the future of Corning's Specialty Materials segment, especially given persistent rumors that Apple (NASDAQ:AAPL) -- on Corning's overall results -- might soon replace Gorilla Glass with ultra-durable sapphire in its upcoming iPhone 6.
However, as detailed here, a loss of the iPhone will not be devastating to Corning and they have publicly stated that they still expects new model launches to drive Specialty Materials sales up 10% year over year in the current quarter. As of two weeks ago, that also includes a new Gorilla Glass 3 deal with entry-level device specialist Micromax, which is India's second-largest smartphone brand. As it stands, Gorilla Glass has been featured in 33 major brands, 2450 product models, and 2.7 billion devices.
What's more, it's evident Corning has no intention to let one of its most promising future growth drivers languish: As Flaws confirmed last month, Corning plans "to introduce a new, enhanced generation of [...] Gorilla Glass later this year." When that happens, it'll no doubt complicate any plans for Corning's current customers trying to justify the switch to another device cover.
Corning is "built for longevity"
Finally, remember Corning was founded in 1851, and it arguably knows better than any other company how to survive and thrive in continuously changing technology environments. Corning CEO Wendell Weeks, for example, is often maligned on Wall Street for stubbornly refusing to manage the company around quarterly results.
He also reminded investors of this during Corning's last annual meeting in April, when he said, "This company is built for longevity. [...] Our products and markets have changed many times over the years, but our innovations share fundamental ingredients: a really tough problem; a combination of materials and process innovation; and a solution that makes a real difference in people's lives."
In fact, that decidedly Foolish mindset was exactly why I singled out Corning in early 2013 as a stock investors could comfortably own for the next five decades if they so chose. Corning stock has risen nearly 70% since then, but it still trades at a modest 17 times trailing-12-month earnings, and less than 13 times next year's estimates. In the end, for patient investors with a long-term time horizon, I'm still convinced Corning stock is a compelling buy.