Corning Incorporated (NYSE:GLW) is an undervalued 5G play that’s poised to take advantage of an economic turnaround in 2021 and grab a bigger foothold in the lucrative 5G industry.
To that end, Corning recently launched “Evolv,” a small-footprint connector that will speed up 5G deployment and coverage. (Source: “Corning Introduces Smaller, 5G-Ready Connectivity Solutions – Designed to Speed Deployment of Fiber Networks as Bandwidth Demand Surges,” Corning Incorporated, October 26, 2020.)
Why could this be a moneymaking game changer?
Existing 3G and 4G connectors are typically placed every few miles. That might sound like a lot in close proximity, but it isn’t where 5G is concerned.
For starters, 3G and 4G networks can easily have their signals blocked by coverage gaps. You can’t use that same infrastructure for 5G networks. In fact, you need a lot more 5G connectors to support the volume of connections, low latency, and connection speeds.
Instead of being placed a few miles apart, small-cell 5G connectors can be placed just 500 feet apart. More 5G connectors covering a small area results in a denser, faster, more connected network.
Corning’s Evolv 5G connectors are half the size of current offerings and can connect to terminals that are up to four times smaller. This is an important distinction between what Corning’s offering and what’s out there right now.
Current networks are not designed for the density of connectors needed for 5G networks. That’s why 5G-ready connectivity products will be in such high demand. Moreover, because of their size, they will allow 5G operators to lower their costs, speed up deployment, and stay ahead of the demand for high-speed connectivity.
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GLW Stock Overview
When most people hear the name Corning, they probably think of its “CorningWare,” “Corelle,” and “Pyrex” glass bakeware, but they sold that division back in 1998. Though the company still works in specialty glass, today Corning is an electronics company and leader in fiber optics and 5G. (Source: “Science of Glass,” Corning Incorporated, last accessed November 2, 2020.)
Corning actually invented low-loss optical fiber back in 1970. And, with more than two billion kilometers (1.2 billion miles) of fiber delivered worldwide, the company continues to ensure that we can chat, post, download, message, and transact with greater ease.
Corning continues to be the world leader and innovator of the next wave of 5G infrastructure, and its launch of Evolv helps solidify that leading position.
Strong Q3 Results Topped the Estimates
On October 26, Corning announced that its generally accepted accounting principles (GAAP) net sales for the third quarter, ended September 30, increased two percent year-over-year, with core sales up 16% sequentially to $3.0 billion. (Source: “Corning Reports Third-Quarter 2020 Results,” Corning Incorporated, October 27, 2020.)
The strong third-quarter results were propelled by the company’s Environmental Technologies and Specialty Materials segments, whose sales were up 68% and 37%, respectively.
The company reported third-quarter net income of $427.0 million, or $0.48 per share, compared to $337.0 million, or $0.38, in the same period last year.
Corning generated third-quarter free cash flow of $518.0 million and ended the quarter with $2.5 billion in cash.
On the 5G front, during the quarter, Corning helped its customers expand and densify networks. The company is helping Verizon Communications Inc. (NYSE:VZ) deploy its products in retail stores, hospitals, and manufacturing plants. And, as mentioned earlier, Corning launched its Evolv 5G-ready connectivity solutions.
Apple Inc‘s (NASDAQ: AAPL) recently launched “iPhone 12” uses Corning’s tough “Ceramic Shield” glass. And Samsung Electronics Co‘s “Galaxy Note20 Ultra” uses Corning’s “Gorilla Glass Victus.”
Corning Incorporated is a leader in fiber optics, which is at the heart of 5G networks.
As outlined earlier, the company recently reported strong third-quarter results, financially and operationally. Not only did Corning top expectations, it also launched a new groundbreaking product, Evolv, which should bring the company a massive new revenue stream. Despite the tight economic climate, Corning expects to report another solid quarter to end the year.