Corning Incorporated GLW recently announced that it will expand its optical cable manufacturing capacity by setting up a new production facility in Gilbert, AZ. In addition to generating about 250 jobs initially to boost regional economic development, the investment is likely to help its strategic partner AT&T Inc. T increase its fiber footprint across the country and scale up its broadband network connectivity. A surge in demand for broadband connectivity has led to a wide proliferation of fiber infrastructure throughout the country, and carriers like AT&T are aiming to significantly increase their fiber coverage to gain a greater market share. An integrated fiber expansion strategy is expected to improve AT&T’s broadband connectivity for enterprise and consumer markets, while steady 5G deployments are likely to boost end-user experience. The carrier intends to achieve this objective by leveraging its long-term business association with Corning spanning over three decades and gain a competitive edge in the fiber industry, which is probably in the early stages of a major growth cycle. The new facility is likely to be operational in 2024. It will enable Corning to serve the rising demand for broadband solutions in the western part of the country and Canada. With this, the company has invested more than $500 million since 2020 to increase its fiber and cable manufacturing capacity. The investment was also perhaps buoyed by the U.S. government's plans to award $42.5 billion as grants to states to expand broadband infrastructure and reach the underserved and underpenetrated regions. Multiple factors are likely to drive the company’s fiber-optic solutions business over the next several years, primarily the increasing use of mobile devices that require efficient data transfer and networking systems. Supporting this trend is the proliferation of clouds, which is resulting in increased storage and even computing on a virtual plane. Since both consumers and enterprises are using the network more, there is a tremendous demand for quality networking. As optical networks are more efficient and most existing networks are copper-based, the demand for optical solutions is solid. Corning has several products focused on the datacenter with a portfolio consisting of optical fiber, hardware, cable, and connectors that help it to create optical solutions to meet evolving customer needs. Despite continued chip shortage and inflated raw material prices, Corning expects to witness 6-8% compound annual sales growth and 12-15% compound annual earnings per share growth through 2023 while investing $10-$12 billion in research, development & engineering, capital, and mergers and acquisitions. It plans to expand its operating margin and return on invested capital and deliver $8-$10 billion to shareholders, including an annual dividend per share increase of at least 10%. To achieve its goals, the company expects an incremental $3-$4 billion in annual sales and improvement in profitability by the end of 2023. GLW is extending performance under its 2020-2023 Strategy & Growth Framework and focusing on improving its product portfolio and utilizing financial strength to enhance shareholder returns. The stock has lost 11.9% over the past year compared with the industry’s decline of 6.1%.
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Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #4 (Sell) stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. TESSCO Technologies Incorporated TESS, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 61.9%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 49.4% since August 2021. TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry. Spirent Communications plc SPMYY carries a Zacks Rank #2. Earnings estimates for the current year for the stock have moved up 10.8% since August 2021, while that for the next year is up 11.8%. Founded in 1936 and headquartered in Crawley, the United Kingdom, Spirent offers a comprehensive, end-to-end solution that validates forwarding performance, latency and functional capabilities in an integrated approach that reduces the cost of ownership. It is a leading provider of Ethernet validation solutions in the market.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AT&T Inc. (T) : Free Stock Analysis Report Corning Incorporated (GLW) : Free Stock Analysis Report TESSCO Technologies Incorporated (TESS) : Free Stock Analysis Report Spirent Communications PLC (SPMYY) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
Market internals were negative on the NYSE and Nasdaq as trading volumes rose from the previous session. All closed near their intraday lows as all held their near-term support levels except for the VALUA. All the major equity indexes closed lower yesterday with negative internals on higher volume for the NYSE and Nasdaq as all closed at or near their intraday lows.
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