Corning Incorporated (GLW) specializes in developing and manufacturing glass, ceramics, and optical physics products, serving diverse industries from telecommunications and consumer electronics, to life sciences. This company is unique thanks to its 170 years of innovation, developing category-defining products, which now make it a fundamental part of the US semiconductor industry’s supply chain. This is further confirmed by the recent funding the company has received under the CHIPS and Science Act.
The company’s primary products are specialty glass like the Gorilla Glass used in mobile devices; and precision glass for advanced displays, including LCD and OLED screens. Additionally, Corning manufactures high-performance optical fiber and cable systems for data communication, ceramic substrates and filters for emission control in automotive applications, glass for scientific instruments, and high-purity fused silica for semiconductor manufacturing.
The Optical Communications segment generates the largest revenue at 36%, followed by display technologies at 30%. Life sciences products contribute roughly 20% and environmental technologies add about 11% to the total revenue.
The company serves multiple industries and is in more than 30 countries. However, its operations are heavily concentrated in North America, with approximately 60% of its revenue generated in the U.S., around 20% from China, and about 10% from Europe. Apple, Samsung Electronics, Huawei Technologies, Sony Corporation, Tesla, Boeing, Ford Motor, General Electric, and LG Electronics, are among Corning’s top clients.
Corning isn’t the biggest semiconductor player out there, but the company has its own importance as confirmed by its inclusion in the US CHIPS and Science Act. It is set to receive $32 million in funding under the Act, mainly for the expansion of its manufacturing facility in Canton. The investment will help support the glassmaking part of the business, which supplies glass and other materials to semiconductor manufacturers.
The company reported a free cash flow of $553 million in the last quarter, which is impressive for a growth company that also increased its R&D spending by 10%. Its $7 billion long-term debt has often been talked about as a concern. However, investors should note that its debt maturity schedule is one of the longest among the S&P 500 companies. In the next 5 years, the company only has $1 billion worth of debt due, which shouldn’t be a concern with the impressive free cash flow generation.
A healthy dividend yield of 2.37% provides the icing on the cake for income investors willing to bet on the smaller players in the US semiconductor industry.
Corning is not on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held GLW at the end of the second quarter which was 31 in the previous quarter. While we acknowledge the potential of GLW as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as GLW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
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