Corning (GLW), a developer of advanced glass substrates for multiple markets, has announced its decision to hike quarterly dividend by 2 cents to 12 cents per share. This translates into a 20% increase from the prior dividend of 10 cents.
The increased dividend will be paid on Mar 31, 2015, to shareholders of record as on Feb 27. Additionally, the company approved a new stock repurchase program worth $1.5 billion, which will expire at the end of 2016.
The strength of Corning’s business model is reflected in its strong cash generation capabilities and commitment to return value to shareholders. We believe continued share buybacks and dividend hikes will increase investors’ confidence in the stock.
Corning’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, share repurchases and strategic acquisitions. During the last concluded quarter (third-quarter 2014), Corning spent $224 million on share repurchases and $152 million on dividends. The cash and short-term investments balance was $6.10 billion, up $218 million. However, the company has a significant debt balance. Including long-term liabilities and short-term debt, the net debt position was $178 million at the end of the quarter.
We remain encouraged by Corning’s strong cash position and its ability to service its long-term debts.
Corning’s third-quarter earnings beat our expectations but revenues missed the same by 2.8%. During the quarter, the company witnessed strong demand across all its major product lines and markets, but a negative impact on prices as well, which could have been the result of increased competition.
Currently, Corning shares carry a Zacks Rank #3 (Hold). Other stocks worth considering are 8×8 Inc. (EGHT), Arista Networks, Inc. (ANET), sporting a Zacks Rank #1 (Strong Buy), and ClearOne, Inc. (CLRO) with a Zacks Rank #2 (Buy).
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