Glass technology products manufacturer Corning Incorporated (NYSE:GLW) has had an interesting relationship with Jim Cramer’s radar. Late last year, the CNBC TV host was one of the firm’s strongest supporters as he praised it for its partnership with Apple to bring manufacturing back to the US under President Trump’s initiatives. However, more recently, he has started to advise caution for the firm. For instance, in July, Cramer insisted that Corning Incorporated (NYSE:GLW) remained too volatile to buy. In his morning appearance on September 15th, the CNBC TV host reiterated that he would not be buying the stock at these levels and would instead wait for it to go lower:
“I have been selling a lot of data center, going into last Thursday’s meeting. I’m not looking to pick em back. I don’t want to just go buy them. I don’t want to go buy Corning, where Corning, it dropped 25 dollar. I don’t want to buy it. I want to wait until it goes lower.”
One major reason behind Cramer’s earlier optimism about Corning Incorporated was the firm’s potential to replace copper in data centers with glass. For instance, by October, he remarked that This is the finest glass maker in the world,” when referring to the firm. Then, in January, Cramer turned a bit cautious and commented that “Corning. . .potential winner.”
Looking at the optical business, the firm’s optical communications business grew revenue and net income by 32% and 77% annually to sit at $2 billion and $438 million during the second quarter. Additionally, during the earnings call, Corning Incorporated’s management shared that its enterprise sales grew by 65% annually to $1.27 billion. For comparison, during the quarter, the firm’s revenue and net income grew by 17% and 30% to indicate that the enterprise tailwinds were faster than the broader growth. As an added bonus, Corning Incorporated’s solar business also grew strongly, courtesy of its 90% sales growth to $438 million.
At the same time, just as is the case with the broader technology market, Corning Incorporated is also experiencing a divergence between its smartphone and enterprise businesses. As part of the earnings, the firm’s CFO outlined that its smartphone business should be weaker than usual in the year’s second half due to the red hot memory prices stemming from AI demand. Additionally, bears were shaken by Corning Incorporated announcing a $2 billion equity raise as they wondered whether the firm could experience an enterprise slowdown. Looking at Cramer’s remarks, it appears that he too belives Corning Incorporated is set to go lower. The stock is up by close to 3% since markets closed on the 15th.
Even though its business is more diversified, Corning Incorporated’s forward P/E ratio of 34.72 is not markedly lower than Lumentum’s 42.19. Hedge fund sentiment jumped to 99 funds in Q2 over the 91 funds in Q1. Notable additions in the quarter included Atalan Capital‘s $152 million stake.
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