When Corning Incorporated (NYSE:GLW) announced its most recent earnings (31 December 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Corning has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see GLW has performed.

Commentary On GLW’s Past Performance

GLW’s trailing twelve-month earnings (from 31 December 2019) of US$862m has declined by -11% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -23%, indicating the rate at which GLW is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the whole industry is experiencing the hit as well.

In terms of returns from investment, Corning has fallen short of achieving a 20% return on equity (ROE), recording 7.4% instead. Furthermore, its return on assets (ROA) of 3.7% is below the US Electronic industry of 6.1%, indicating Corning’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Corning’s debt level, has declined over the past 3 years from 5.7% to 5.1%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 15% to 57% over the past 5 years.

What does this mean?

Corning’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Generally companies that face an extended period of reduction in earnings are undergoing some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a sign of a structural shift, which makes Corning and its peers a higher risk investment.