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Schaeffer's Daily Contrarian: Bullish Bettors May Get Burned by Corning

^{Published on 2009-02-20 14:02:51, Last Modified on 2009-02-20 14:03:25 - Market Wire}
 

CINCINNATI--([ BUSINESS WIRE ])--This skeptical article notes that the shares of Corning Incorporated (NYSE: GLW) have added 30% during the past 3 months, and suggests that investors may be anticipating greater earnings results than the company can deliver. Due to the economic downturn, says the author, Corning is facing uncertain demand and falling prices for its glass display panels. These factors should contribute to anemic profits for GLW, where margins are dependent upon both sales volume and solid pricing on finished goods.

Thanks to the recent run-up in the stock, it's now looking extremely pricey -- its forward price-to-earnings ratio is 17.71, near GLW's median level during the past 5 years. It seems that investors are expecting Corning to buck the remarkably weak consumer environment and continue to rake in strong earnings. This optimism sets the stage for an eventual disappointment, warns this bearish write-up. According to the author, the only time to buy GLW "will be when earnings estimates have bottomed and when earnings have fallen so far that year-over-year earnings growth becomes a virtual certainty."

To continue reading this article, click here: [ http://www.schaeffersresearch.com/commentary/content/bullish+bettors+may+get+burned+by+corning/dailycontrarian.aspx?single=true&newsid=91300#91300&source=businesswire ]