Stock Analysis on Net
Stock Analysis on Net

Corning Inc. (NYSE:GLW)

This company has been moved to the archive! The financial data has not been updated since May 2, 2024.

Present Value of Free Cash Flow to Equity (FCFE)

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In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

Corning Inc., free cash flow to equity (FCFE) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFEt or Terminal value (TVt) Calculation Present value at 14.52%
01 FCFE0 1,331
1 FCFE1 1,327 = 1,331 × (1 + -0.27%) 1,159
2 FCFE2 1,356 = 1,327 × (1 + 2.16%) 1,034
3 FCFE3 1,418 = 1,356 × (1 + 4.59%) 944
4 FCFE4 1,518 = 1,418 × (1 + 7.02%) 883
5 FCFE5 1,661 = 1,518 × (1 + 9.45%) 844
5 Terminal value (TV5) 35,893 = 1,661 × (1 + 9.45%) ÷ (14.52% – 9.45%) 18,226
Intrinsic value of Corning Inc. common stock 23,090
 
Intrinsic value of Corning Inc. common stock (per share) $26.95
Current share price $33.57

Based on: 10-K (reporting date: 2023-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.09%
Expected rate of return on market portfolio2 E(RM) 13.79%
Systematic risk of Corning Inc. common stock βGLW 1.08
 
Required rate of return on Corning Inc. common stock3 rGLW 14.52%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rGLW = RF + βGLW [E(RM) – RF]
= 4.09% + 1.08 [13.79% – 4.09%]
= 14.52%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Corning Inc., PRAT model

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Average Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Common dividends 968 926 812 681 625
Preferred dividends — — 24 98 98
Net income attributable to Corning Incorporated 581 1,316 1,906 512 960
Net sales 12,588 14,189 14,082 11,303 11,503
Total assets 28,500 29,499 30,154 30,775 28,898
Total Corning Incorporated shareholders’ equity 11,551 12,008 12,333 13,257 12,907
Financial Ratios
Retention rate1 -0.67 0.30 0.57 -0.64 0.27
Profit margin2 4.62% 9.27% 13.36% 3.66% 7.49%
Asset turnover3 0.44 0.48 0.47 0.37 0.40
Financial leverage4 2.47 2.46 2.44 2.32 2.24
Averages
Retention rate -0.03
Profit margin 7.68%
Asset turnover 0.43
Financial leverage 2.39
 
FCFE growth rate (g)5 -0.27%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Retention rate = (Net income attributable to Corning Incorporated – Common dividends – Preferred dividends) ÷ (Net income attributable to Corning Incorporated – Preferred dividends)
= (581 – 968 – 0) ÷ (581 – 0)
= -0.67

2 Profit margin = 100 × (Net income attributable to Corning Incorporated – Preferred dividends) ÷ Net sales
= 100 × (581 – 0) ÷ 12,588
= 4.62%

3 Asset turnover = Net sales ÷ Total assets
= 12,588 ÷ 28,500
= 0.44

4 Financial leverage = Total assets ÷ Total Corning Incorporated shareholders’ equity
= 28,500 ÷ 11,551
= 2.47

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= -0.03 × 7.68% × 0.43 × 2.39
= -0.27%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (28,757 × 14.52% – 1,331) ÷ (28,757 + 1,331)
= 9.45%

where:
Equity market value0 = current market value of Corning Inc. common stock (US$ in millions)
FCFE0 = the last year Corning Inc. free cash flow to equity (US$ in millions)
r = required rate of return on Corning Inc. common stock

FCFE growth rate (g) forecast

Corning Inc., H-model

Microsoft Excel
Year Value gt
1 g1 -0.27%
2 g2 2.16%
3 g3 4.59%
4 g4 7.02%
5 and thereafter g5 9.45%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= -0.27% + (9.45% – -0.27%) × (2 – 1) ÷ (5 – 1)
= 2.16%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= -0.27% + (9.45% – -0.27%) × (3 – 1) ÷ (5 – 1)
= 4.59%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= -0.27% + (9.45% – -0.27%) × (4 – 1) ÷ (5 – 1)
= 7.02%