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Investment Analysis Clubs Saul’s Investing Discussions
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Corning is another company I hold shares in. As well, it appears they need a ticker guide, so fingers are crossed.

They release earnings on 4/28, so this was easy as I used full years, 2014 and 2013.

However, they report earnings using GAAP and Core performance.

I’m not sure which is the more accurate results to use.

So, here’s both.

GAAP, 2014, 1.73, 2013 1.34
Core, 2014, 1.5$, 2013 1.23

Stock price on 4/24/15 was $22.52

PE GAAP is 13.017
PE Core is 14.718

Increase in earnings GAAP is .39
Increase in earnings Core is .30

Growth rate GAAP is 29.10%
Growth rate Core is 24.39%

1YPEG GAAP is .4473
1YPEG Core is .6034

What would you use, GAAP or Core?

And, does it look like I did it right?

How does Corning look as an investment?

Thanks for any help you all can give ms with doing these calculations.

mazske

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Core, 2014, 1.5$, 2013 1.23

That 2014 number looks like it has a typo. Based on other numbers you showed, it should be 1.53? (Your other calculations look right if I use 1.53.)

1YPEG GAAP is .4473
1YPEG Core is .6034

What would you use, GAAP or Core?

I would naively use the worst one, which is Core. But even that suggests that the stock price is about 60% of fair value (that is, fair value is closer to 22.52 / 0.6034 = $37.32).

I would naively use the Core growth rate, too. It’s not quite as high as some of Saul’s picks, but better than Polaris.

That 1YPEG suggests now would be a good time to buy.

Neither Polaris nor Corning options pay very well. Polaris reported this past week, which would tend to drive the implied volatility down. Corning reports next week, so implied volatility should be up (I haven’t checked).

The GLW August $20 puts have about a 7.7% annualized return (not enough for me) and strike 11.2% below the stock price (good). Since the 1YPEG suggests the current stock price is good, I looked at the $22 puts, which have a 15.6% annualized return (decent). The strike is only 2.3% below the stock price, which normally wouldn’t be enough safety margin for me, but the good 1YPEG would make me more comfortable with that strike.

-Mark

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That 2014 number looks like it has a typo. Based on other numbers you showed, it should be 1.53? (Your other calculations look right if I use 1.53.)

Whoops. Yes, it is $1.53 according to my notes I wrote down.

I have never used options. Just from reading posts like yours, I’m learning more about them.

Corning reports on Tuesday. Sometime after they report, I’ll figure up the new numbers.

I would naively use the worst one, which is Core. But even that suggests that the stock price is about 60% of fair value (that is, fair value is closer to 22.52 / 0.6034 = $37.32).

That would be a nice bump if the price could jump up to $37.

If better earnings come out Tuesday, which is an unknown at this moment, that could make it an even better buy now.

Thanks for the feedback. I’m slowly learning.

mazske

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Mazske,
What is Core earnings? I have heard of Basic and Diluted Gaap earnings and Basic and diluted Non-Gaap earnings but I am not sure what core earnings are.

Thanks,
Andy

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I didn’t know what Core earnings were either and since I own Corning, I thought, “Why don’t I try to contribute something meaningful for once?” I figured a little digging around wouldn’t kill me.

Here’s what I discovered. According to their fourth quarter and full year review released in January, Core earnings are defined as such:

These are non-GAAP financial measures. The reconciliation between GAAP and non-GAAP measures is provided in the tables following this news release, as well as on the company’s website. Core performance metrics (non-GAAP) are adjusted to exclude the impact of changes in Japanese yen and Korean won foreign exchange rates, as well as other items that do not reflect ongoing operations of the company.

http://www.corning.com/news_center/news_releases/2015/201501…

So, if I’m reading this right, they’re basically non-GAAP earnings. Right? (I’m very slow. Buzzfeed articles on “LOL Cat Videos” are much more suited to my reading level). Anyway, hope this helps.

  • Matt
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Thanks Matt,
That makes sense so they are just calling the adjusted earnings core earnings.

Andy