Why Corning Stock Plunged Today
Key Points
Corning's earnings beat Wall Street's expectations and raised its long-term guidance.
Given the stock's pricey multiple, investors expected more.
Shares of Corning (NYSE: GLW) fell out of the gate on Tuesday, tumbling as much as 20.1%. As of 11:07 a.m. ET, the stock was still down 19.4%.
The catalyst that sent the optical fiber specialist lower was the company's financial results, which investors found wanting.
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Good isn't good enough
For the second quarter, Corning generated revenue that grew 17% year over year to $4.51 billion, driving earnings per share (EPS) that increased 19% to $0.64. The results were driven by core (adjusted) sales of $4.74 billion, up 17%, which fueled core EPS of $0.78, up 30%.
For context, the results beat Wall Street's expectations, as analysts' consensus estimates called for adjusted revenue of $4.63 billion and adjusted EPS of $0.76.
CEO Wendell Weeks said, "We're entering a new phase of accelerating growth, and we expect to deliver a sales CAGR [compound annual growth rate] of 19% from Q4 2026 to Q4 2030 -- while growing earnings faster than sales, with significantly higher returns on invested capital and substantially more free cash flow."
In keeping with those expectations, management upgraded Corning's financial growth strategy roadmap -- dubbed its "Springboard Plan." The company is now forecasting an annual sales run rate of $20 billion by the end of 2026, $30 billion by the end of 2028, and $40 billion by the end of 2030. For context, full-year sales in 2025 were $15.6 billion, so the proposed growth is solid.
That all seems like good news, so what drove the stock lower? Simply put, investors wanted more. For the upcoming third quarter, Corning's outlook calls for sales of $4.9 billion to $5 billion, which would represent 16% growth at the midpoint of its guidance, resulting in adjusted EPS of $0.87. That was largely in line with Wall Street's estimates of $4.99 billion in revenue and $0.85 in EPS.
Corning stock currently trades for 56 times earnings, which some investors find a bit pricey for low double-digit growth. On the other hand, the stock is selling for 27 times next year's expected sales, a much more reasonable multiple.
Danny Vena, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Corning. The Motley Fool has a disclosure policy.