Intrinsic value of Corning - GLW

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$27.02

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$27.02

 
Intrinsic value

$9.70

 
Up/down potential

-64%

 
Rating

str. sell

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of GLW stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 24.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.06
  11.00
  10.40
  9.86
  9.37
  8.94
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
Revenue, $m
  9,390
  10,423
  11,507
  12,641
  13,826
  15,062
  16,349
  17,688
  19,080
  20,526
  22,030
  23,592
  25,216
  26,904
  28,660
  30,486
  32,387
  34,366
  36,428
  38,578
  40,820
  43,158
  45,600
  48,149
  50,812
  53,596
  56,507
  59,551
  62,737
  66,070
  69,561
Variable operating expenses, $m
 
  7,831
  8,629
  9,464
  10,337
  11,246
  12,194
  13,179
  14,204
  15,269
  16,376
  17,369
  18,564
  19,807
  21,099
  22,444
  23,843
  25,301
  26,819
  28,401
  30,052
  31,773
  33,571
  35,448
  37,408
  39,458
  41,601
  43,842
  46,187
  48,641
  51,211
Fixed operating expenses, $m
 
  978
  1,002
  1,027
  1,053
  1,079
  1,106
  1,134
  1,162
  1,191
  1,221
  1,252
  1,283
  1,315
  1,348
  1,382
  1,416
  1,452
  1,488
  1,525
  1,563
  1,602
  1,642
  1,683
  1,726
  1,769
  1,813
  1,858
  1,905
  1,952
  2,001
Total operating expenses, $m
  7,999
  8,809
  9,631
  10,491
  11,390
  12,325
  13,300
  14,313
  15,366
  16,460
  17,597
  18,621
  19,847
  21,122
  22,447
  23,826
  25,259
  26,753
  28,307
  29,926
  31,615
  33,375
  35,213
  37,131
  39,134
  41,227
  43,414
  45,700
  48,092
  50,593
  53,212
Operating income, $m
  1,391
  1,614
  1,875
  2,150
  2,437
  2,736
  3,049
  3,374
  3,713
  4,066
  4,432
  4,972
  5,369
  5,782
  6,212
  6,660
  7,127
  7,614
  8,122
  8,652
  9,205
  9,783
  10,387
  11,018
  11,679
  12,370
  13,093
  13,851
  14,645
  15,477
  16,349
EBITDA, $m
  2,586
  2,967
  3,353
  3,757
  4,180
  4,621
  5,081
  5,560
  6,059
  6,577
  7,116
  7,677
  8,261
  8,867
  9,499
  10,156
  10,841
  11,555
  12,299
  13,076
  13,886
  14,732
  15,616
  16,540
  17,506
  18,516
  19,573
  20,680
  21,839
  23,054
  24,326
Interest expense (income), $m
  184
  160
  208
  258
  310
  364
  421
  480
  541
  605
  671
  740
  811
  886
  963
  1,043
  1,127
  1,214
  1,304
  1,399
  1,497
  1,600
  1,707
  1,818
  1,935
  2,057
  2,184
  2,318
  2,457
  2,603
  2,755
Earnings before tax, $m
  3,692
  1,454
  1,667
  1,892
  2,127
  2,372
  2,628
  2,894
  3,172
  3,461
  3,762
  4,232
  4,558
  4,897
  5,249
  5,617
  6,001
  6,400
  6,817
  7,253
  7,708
  8,183
  8,680
  9,200
  9,743
  10,313
  10,909
  11,533
  12,188
  12,874
  13,593
Tax expense, $m
  -3
  392
  450
  511
  574
  640
  710
  782
  856
  934
  1,016
  1,143
  1,231
  1,322
  1,417
  1,517
  1,620
  1,728
  1,841
  1,958
  2,081
  2,209
  2,344
  2,484
  2,631
  2,784
  2,945
  3,114
  3,291
  3,476
  3,670
Net income, $m
  3,695
  1,061
  1,217
  1,381
  1,552
  1,732
  1,918
  2,113
  2,316
  2,526
  2,746
  3,089
  3,327
  3,574
  3,832
  4,101
  4,380
  4,672
  4,977
  5,295
  5,627
  5,974
  6,336
  6,716
  7,113
  7,528
  7,963
  8,419
  8,897
  9,398
  9,923

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5,715
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  27,899
  24,640
  27,203
  29,885
  32,687
  35,608
  38,650
  41,815
  45,105
  48,526
  52,080
  55,773
  59,612
  63,603
  67,753
  72,071
  76,565
  81,244
  86,119
  91,201
  96,500
  102,029
  107,800
  113,827
  120,124
  126,705
  133,586
  140,783
  148,314
  156,195
  164,446
Adjusted assets (=assets-cash), $m
  22,184
  24,640
  27,203
  29,885
  32,687
  35,608
  38,650
  41,815
  45,105
  48,526
  52,080
  55,773
  59,612
  63,603
  67,753
  72,071
  76,565
  81,244
  86,119
  91,201
  96,500
  102,029
  107,800
  113,827
  120,124
  126,705
  133,586
  140,783
  148,314
  156,195
  164,446
Revenue / Adjusted assets
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
Average production assets, $m
  13,348
  14,821
  16,363
  17,976
  19,661
  21,418
  23,248
  25,152
  27,131
  29,188
  31,326
  33,548
  35,857
  38,258
  40,754
  43,351
  46,054
  48,869
  51,801
  54,858
  58,045
  61,371
  64,843
  68,468
  72,255
  76,214
  80,353
  84,682
  89,211
  93,952
  98,915
Working capital, $m
  6,297
  928
  1,024
  1,125
  1,231
  1,341
  1,455
  1,574
  1,698
  1,827
  1,961
  2,100
  2,244
  2,394
  2,551
  2,713
  2,882
  3,059
  3,242
  3,433
  3,633
  3,841
  4,058
  4,285
  4,522
  4,770
  5,029
  5,300
  5,584
  5,880
  6,191
Total debt, $m
  3,902
  4,738
  5,865
  7,046
  8,278
  9,563
  10,902
  12,294
  13,742
  15,247
  16,811
  18,436
  20,125
  21,881
  23,707
  25,607
  27,584
  29,643
  31,788
  34,024
  36,356
  38,789
  41,328
  43,980
  46,751
  49,646
  52,674
  55,841
  59,154
  62,622
  66,252
Total liabilities, $m
  10,006
  10,842
  11,969
  13,150
  14,382
  15,667
  17,006
  18,398
  19,846
  21,351
  22,915
  24,540
  26,229
  27,985
  29,811
  31,711
  33,688
  35,747
  37,892
  40,128
  42,460
  44,893
  47,432
  50,084
  52,855
  55,750
  58,778
  61,945
  65,258
  68,726
  72,356
Total equity, $m
  17,893
  13,799
  15,234
  16,736
  18,305
  19,940
  21,644
  23,416
  25,259
  27,174
  29,165
  31,233
  33,383
  35,618
  37,942
  40,360
  42,876
  45,497
  48,227
  51,072
  54,040
  57,136
  60,368
  63,743
  67,269
  70,955
  74,808
  78,839
  83,056
  87,469
  92,090
Total liabilities and equity, $m
  27,899
  24,641
  27,203
  29,886
  32,687
  35,607
  38,650
  41,814
  45,105
  48,525
  52,080
  55,773
  59,612
  63,603
  67,753
  72,071
  76,564
  81,244
  86,119
  91,200
  96,500
  102,029
  107,800
  113,827
  120,124
  126,705
  133,586
  140,784
  148,314
  156,195
  164,446
Debt-to-equity ratio
  0.218
  0.340
  0.390
  0.420
  0.450
  0.480
  0.500
  0.530
  0.540
  0.560
  0.580
  0.590
  0.600
  0.610
  0.620
  0.630
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
  0.680
  0.690
  0.690
  0.700
  0.700
  0.710
  0.710
  0.720
  0.720
Adjusted equity ratio
  0.549
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,695
  1,061
  1,217
  1,381
  1,552
  1,732
  1,918
  2,113
  2,316
  2,526
  2,746
  3,089
  3,327
  3,574
  3,832
  4,101
  4,380
  4,672
  4,977
  5,295
  5,627
  5,974
  6,336
  6,716
  7,113
  7,528
  7,963
  8,419
  8,897
  9,398
  9,923
Depreciation, amort., depletion, $m
  1,195
  1,353
  1,477
  1,607
  1,743
  1,885
  2,033
  2,186
  2,346
  2,512
  2,684
  2,705
  2,892
  3,085
  3,287
  3,496
  3,714
  3,941
  4,178
  4,424
  4,681
  4,949
  5,229
  5,522
  5,827
  6,146
  6,480
  6,829
  7,194
  7,577
  7,977
Funds from operations, $m
  2,771
  2,414
  2,694
  2,988
  3,296
  3,617
  3,951
  4,299
  4,661
  5,038
  5,430
  5,795
  6,219
  6,660
  7,119
  7,597
  8,094
  8,613
  9,154
  9,719
  10,308
  10,923
  11,566
  12,237
  12,940
  13,675
  14,444
  15,249
  16,092
  16,975
  17,900
Change in working capital, $m
  250
  92
  96
  101
  105
  110
  115
  119
  124
  129
  134
  139
  145
  150
  156
  163
  169
  176
  184
  191
  200
  208
  217
  227
  237
  248
  259
  271
  283
  297
  311
Cash from operations, $m
  2,521
  2,316
  2,598
  2,887
  3,190
  3,507
  3,836
  4,180
  4,537
  4,909
  5,296
  5,656
  6,074
  6,510
  6,962
  7,434
  7,925
  8,437
  8,971
  9,527
  10,108
  10,715
  11,348
  12,010
  12,703
  13,427
  14,185
  14,978
  15,808
  16,678
  17,590
Maintenance CAPEX, $m
  0
  -1,076
  -1,195
  -1,320
  -1,450
  -1,586
  -1,727
  -1,875
  -2,028
  -2,188
  -2,354
  -2,526
  -2,705
  -2,892
  -3,085
  -3,287
  -3,496
  -3,714
  -3,941
  -4,178
  -4,424
  -4,681
  -4,949
  -5,229
  -5,522
  -5,827
  -6,146
  -6,480
  -6,829
  -7,194
  -7,577
New CAPEX, $m
  -1,130
  -1,473
  -1,541
  -1,613
  -1,685
  -1,757
  -1,830
  -1,904
  -1,979
  -2,057
  -2,138
  -2,222
  -2,309
  -2,400
  -2,496
  -2,597
  -2,703
  -2,815
  -2,932
  -3,057
  -3,188
  -3,326
  -3,471
  -3,625
  -3,787
  -3,959
  -4,139
  -4,329
  -4,530
  -4,741
  -4,963
Cash from investing activities, $m
  3,662
  -2,549
  -2,736
  -2,933
  -3,135
  -3,343
  -3,557
  -3,779
  -4,007
  -4,245
  -4,492
  -4,748
  -5,014
  -5,292
  -5,581
  -5,884
  -6,199
  -6,529
  -6,873
  -7,235
  -7,612
  -8,007
  -8,420
  -8,854
  -9,309
  -9,786
  -10,285
  -10,809
  -11,359
  -11,935
  -12,540
Free cash flow, $m
  6,183
  -234
  -139
  -46
  55
  164
  279
  401
  530
  664
  804
  908
  1,060
  1,217
  1,381
  1,550
  1,726
  1,908
  2,097
  2,293
  2,497
  2,708
  2,927
  3,156
  3,394
  3,641
  3,899
  4,168
  4,449
  4,743
  5,050
Issuance/(repayment) of debt, $m
  -573
  1,092
  1,128
  1,180
  1,233
  1,285
  1,338
  1,393
  1,448
  1,505
  1,564
  1,625
  1,689
  1,756
  1,826
  1,900
  1,977
  2,059
  2,145
  2,236
  2,332
  2,433
  2,539
  2,652
  2,771
  2,896
  3,028
  3,167
  3,313
  3,468
  3,631
Issuance/(repurchase) of shares, $m
  -4,089
  0
  446
  368
  281
  187
  86
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -4,661
  1,092
  1,574
  1,548
  1,514
  1,472
  1,424
  1,393
  1,448
  1,505
  1,564
  1,625
  1,689
  1,756
  1,826
  1,900
  1,977
  2,059
  2,145
  2,236
  2,332
  2,433
  2,539
  2,652
  2,771
  2,896
  3,028
  3,167
  3,313
  3,468
  3,631
Total cash flow (excl. dividends), $m
  1,436
  858
  989
  1,135
  1,288
  1,449
  1,618
  1,794
  1,978
  2,169
  2,368
  2,533
  2,749
  2,973
  3,207
  3,450
  3,703
  3,967
  4,242
  4,529
  4,828
  5,141
  5,467
  5,808
  6,164
  6,537
  6,927
  7,335
  7,763
  8,211
  8,680
Retained Cash Flow (-), $m
  895
  -1,365
  -1,435
  -1,502
  -1,569
  -1,636
  -1,703
  -1,772
  -1,843
  -1,915
  -1,990
  -2,068
  -2,150
  -2,235
  -2,324
  -2,418
  -2,517
  -2,621
  -2,730
  -2,846
  -2,968
  -3,096
  -3,232
  -3,375
  -3,526
  -3,685
  -3,853
  -4,030
  -4,217
  -4,414
  -4,621
Prev. year cash balance distribution, $m
 
  5,459
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  4,952
  0
  0
  0
  0
  0
  22
  135
  254
  378
  465
  599
  738
  883
  1,032
  1,187
  1,347
  1,512
  1,683
  1,861
  2,044
  2,235
  2,433
  2,638
  2,851
  3,074
  3,305
  3,546
  3,797
  4,059
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  4,748
  0
  0
  0
  0
  0
  15
  84
  146
  198
  221
  256
  281
  296
  303
  302
  293
  278
  259
  236
  211
  185
  159
  134
  111
  90
  71
  55
  41
  31
Current shareholders' claim on cash, %
  100
  100.0
  97.7
  96.0
  94.8
  94.1
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9
  93.9

Corning Incorporated manufactures and sells specialty glasses, ceramics, and related materials in North America, the Asia Pacific, Europe, and internationally. The company operates through five segments: Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials, and Life Sciences. The Display Technologies segment manufactures glass substrates for liquid crystal displays (LCDs) used in LCD televisions, notebook computers, and flat panel desktop monitors. The Optical Communications segment manufactures optical fiber and cable; and hardware and equipment products comprising cable assemblies, fiber optic hardware and connectors, optical components and couplers, closures, network interface devices, and other accessories for various carrier network applications. This segment also offers subscriber demarcation, connection and protection devices, passive solutions, and outside plant enclosures; and coaxial RF interconnects for the cable television industry and microwave applications. The Environmental Technologies segment manufactures ceramic substrates and filter products for emissions control in mobile and stationary, and gasoline and diesel applications. The Specialty Materials segment manufactures products that provide approximately 150 material formulations for glass, glass ceramics, and fluoride crystals. The Life Sciences segment manufactures and supplies scientific laboratory products consisting of consumables, such as plastic vessels, specialty surfaces, and media, as well as general labware and equipment for cell culture research, bioprocessing, genomics, drug discovery, microbiology, and chemistry; and develops and produces technologies for biologic drug production markets. The company was formerly known as Corning Glass Works and changed its name to Corning Incorporated in April 1989. Corning Incorporated was founded in 1851 and is headquartered in Corning, New York.

FINANCIAL RATIOS  of  Corning (GLW)

Valuation Ratios
P/E Ratio 6.8
Price to Sales 2.7
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 9.9
Price to Free Cash Flow 18
Growth Rates
Sales Growth Rate 3.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.6%
Cap. Spend. - 3 Yr. Gr. Rate 2.1%
Financial Strength
Quick Ratio 22
Current Ratio 0.1
LT Debt to Equity 20.4%
Total Debt to Equity 21.8%
Interest Coverage 21
Management Effectiveness
Return On Assets 13.7%
Ret/ On Assets - 3 Yr. Avg. 9.2%
Return On Total Capital 16.4%
Ret/ On T. Cap. - 3 Yr. Avg. 10.7%
Return On Equity 20.1%
Return On Equity - 3 Yr. Avg. 12.8%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 39.9%
Gross Margin - 3 Yr. Avg. 40.6%
EBITDA Margin 54%
EBITDA Margin - 3 Yr. Avg. 45.4%
Operating Margin 14.8%
Oper. Margin - 3 Yr. Avg. 16.7%
Pre-Tax Margin 39.3%
Pre-Tax Margin - 3 Yr. Avg. 30.8%
Net Profit Margin 39.4%
Net Profit Margin - 3 Yr. Avg. 26.5%
Effective Tax Rate -0.1%
Eff/ Tax Rate - 3 Yr. Avg. 13.5%
Payout Ratio 17.5%

GLW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GLW stock intrinsic value calculation we used $9390 million for the last fiscal year's total revenue generated by Corning. The default revenue input number comes from 2016 income statement of Corning. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our GLW stock valuation model: a) initial revenue growth rate of 11% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for GLW is calculated based on our internal credit rating of Corning, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Corning.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of GLW stock the variable cost ratio is equal to 75.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $954 million in the base year in the intrinsic value calculation for GLW stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.4% for Corning.

Corporate tax rate of 27% is the nominal tax rate for Corning. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the GLW stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for GLW are equal to 142.2%.

Life of production assets of 12.4 years is the average useful life of capital assets used in Corning operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for GLW is equal to 8.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $17893 million for Corning - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 908.148 million for Corning is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Corning at the current share price and the inputted number of shares is $24.5 billion.


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COMPANY NEWS

▶ 8 Undervalued Stocks With Growing Book Values   [Apr-18-17 06:37PM  GuruFocus.com]
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▶ Verizon and Corning CEOs on 5G fiber deal   [10:44AM  CNBC Videos]
▶ 10 Things You Didn't Know About Corning Incorporated   [Apr-15-17 12:00PM  Motley Fool]
▶ Corning Named 2017 ENERGY STAR® Partner of the Year   [Apr-06-17 10:02AM  GlobeNewswire]
▶ Why Wendy's, Rent-A-Center, and Corning Slumped Today   [Mar-31-17 05:11PM  Motley Fool]
▶ Phoenix Venture Partners LLC Raises 2nd Fund, PVP II LP   [Mar-27-17 07:00AM  PR Newswire]
▶ 3 Reasons Apple Is a Better Value Stock Than Corning   [Mar-17-17 08:43PM  at Motley Fool]
▶ Moat Investing: 2 Companies With a Material Edge   [Mar-16-17 07:02AM  at Motley Fool]
▶ Is Corning's Dividend Safe?   [Mar-13-17 03:44PM  at Motley Fool]
▶ [$$] CommScope, Dycom Boosted by MWC   [Mar-06-17 03:50PM  at Barrons.com]
▶ Corning's Plans to Put Cash Back in Your Wallet   [Mar-02-17 05:07PM  at Motley Fool]
▶ 3 Tech Stocks That Belong in Any Portfolio   [Feb-27-17 11:00AM  at Motley Fool]
▶ 3 Top 5G Stocks to Buy and Hold   [Feb-22-17 12:46PM  at Motley Fool]
▶ Corning to add 410 jobs at two Charlotte-area plants, spend $176M   [Feb-21-17 09:04AM  at bizjournals.com]
▶ Corning Stock Soared in 2016. Too Late to Buy for 2017?   [Feb-15-17 07:34PM  at Motley Fool]
▶ Corning Announces Quarterly Dividend Increase of 14.8%   [Feb-01-17 11:08AM  GlobeNewswire]
▶ 5 Things Corning Management Wants You to Know   [08:00AM  at Motley Fool]
▶ Corning's Momentum Begins to Accelerate   [07:47AM  at Motley Fool]
▶ What to Watch When Corning Reports Earnings   [Jan-23-17 04:08PM  at Motley Fool]
▶ Cornings Upcoming Earnings: What to Expect   [Jan-20-17 12:29PM  at Investopedia]
▶ Corning Shows Cool, Connected Car of the Future   [Jan-18-17 04:09PM  at Investopedia]
▶ Corning Wants to Revolutionize How You Drive   [Jan-17-17 07:56PM  at Motley Fool]
▶ Corning and Belden Collaborate on Broadband   [Jan-11-17 02:34PM  at Investopedia]
▶ Corning Honored with Technology & Engineering Emmy Award   [Jan-09-17 12:01PM  GlobeNewswire]
▶ Corning Releases New Glass-Enabled Concept Car   [Jan-06-17 11:17AM  at Investopedia]
▶ Behind Corning Inc.s Shares Rise 35% in 2016   [Dec-30-16 12:16PM  at Investopedia]
Stock chart of GLW Financial statements of GLW
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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