What happened
Shares of glassmaking giant Corning (GLW 0.38%) look shiny Wednesday morning, up 12.5% as trading gets underway at 9:35 a.m. ET, after beating earnings estimates in Q4 2021 -- and promising to do it again in Q1 2022.
Heading into today's earnings report, analysts had forecast Corning would produce $0.52 in "core earnings" (which is a non-GAAP metric peculiar to Corning) on sales of $3.6 billion. Instead, Corning earned $0.54 per share on sales of $3.7 billion, beating on both the top and bottom lines.
Image source: Getty Images.
So what
Corning grew its sales 10% year over year in Q4, while "core earnings" increased only 4%. That may not sound great, but according to generally accepted accounting principles (GAAP), Corning actually ended up earning $0.56 per share for the quarter, $0.02 more than its core earnings number -- and a 100% improvement over last year's Q4!
For the full year, Corning reported sales up 25% over 2020 ($14.1 billion, total), and grew its profits 137% ($1.28 per diluted share). The company's "core" results weren't quite as good as that, but still pretty healthy: core sales up 23% for the year, and core earnings up 49%.
Finally, free cash flow at Corning was a strong $425 million for the quarter, and $1.8 billion for the year -- roughly twice the cash Corning generated last year.
Now what
So what does all of this mean for Corning stock? With a market capitalization of nearly $35 billion, Corning shares currently sell for about 19 times free cash flow, or 18 times GAAP profit. Although the company carries a bit of debt on its balance sheet ($5.5 billion net of cash), which means its enterprise value is a bit pricier than its market cap makes it seem, these prices still look attractive relative to analyst forecasts for 21% long-term earnings growth at Corning.
And the longer Corning can grow at 2021's rates, the more of a bargain Corning stock will become.
