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 the Firm (FCFF)

Microsoft Excel

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 the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Corning Inc., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 12.29%
01 FCFF0 864
1 FCFF1 866 = 864 × (1 + 0.18%) 771
2 FCFF2 888 = 866 × (1 + 2.55%) 704
3 FCFF3 932 = 888 × (1 + 4.92%) 658
4 FCFF4 1,000 = 932 × (1 + 7.29%) 629
5 FCFF5 1,096 = 1,000 × (1 + 9.66%) 614
5 Terminal value (TV5) 45,754 = 1,096 × (1 + 9.66%) ÷ (12.29% – 9.66%) 25,633
Intrinsic value of Corning Inc. capital 29,009
Less: Convertible preferred stock, Series A, par value $100 per share (book value) 0
Less: Long-term debt and short-term borrowings (fair value) 7,320
Intrinsic value of Corning Inc. common stock 21,689
 
Intrinsic value of Corning Inc. common stock (per share) $25.32
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.

Weighted Average Cost of Capital (WACC)

Corning Inc., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 28,757 0.80 14.54%
Convertible preferred stock, Series A, par value $100 per share (book value) 0 0.00 0.00%
Long-term debt and short-term borrowings (fair value) 7,320 0.20 3.42% = 4.30% × (1 – 20.58%)

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

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 856,619,222 × $33.57
= $28,756,707,282.54

   Long-term debt and short-term borrowings (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (20.60% + 22.90% + 20.50% + 17.80% + 21.10%) ÷ 5
= 20.58%

WACC = 12.29%

FCFF Growth Rate (g)

FCFF 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)
Interest expense 329 292 300 276 221
Net income attributable to Corning Incorporated 581 1,316 1,906 512 960
 
Effective income tax rate (EITR)1 20.60% 22.90% 20.50% 17.80% 21.10%
 
Interest expense, after tax2 261 225 239 227 174
Add: Preferred dividends — — 24 98 98
Add: Common dividends 968 926 812 681 625
Interest expense (after tax) and dividends 1,229 1,151 1,075 1,006 897
 
EBIT(1 – EITR)3 842 1,541 2,145 739 1,134
 
Current portion of long-term debt and short-term borrowings 320 224 55 156 11
Long-term debt, excluding current portion 7,206 6,687 6,989 7,816 7,729
Total Corning Incorporated shareholders’ equity 11,551 12,008 12,333 13,257 12,907
Total capital 19,077 18,919 19,377 21,229 20,647
Financial Ratios
Retention rate (RR)4 -0.46 0.25 0.50 -0.36 0.21
Return on invested capital (ROIC)5 4.41% 8.15% 11.07% 3.48% 5.49%
Averages
RR 0.03
ROIC 6.52%
 
FCFF growth rate (g)6 0.18%

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).

1 See details »

2023 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 329 × (1 – 20.60%)
= 261

3 EBIT(1 – EITR) = Net income attributable to Corning Incorporated + Interest expense, after tax
= 581 + 261
= 842

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [842 – 1,229] ÷ 842
= -0.46

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 842 ÷ 19,077
= 4.41%

6 g = RR × ROIC
= 0.03 × 6.52%
= 0.18%

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

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (36,077 × 12.29% – 864) ÷ (36,077 + 864)
= 9.66%

where:

Total capital, fair value0 = current fair value of Corning Inc. debt and equity (US$ in millions)
FCFF0 = the last year Corning Inc. free cash flow to the firm (US$ in millions)
WACC = weighted average cost of Corning Inc. capital

FCFF growth rate (g) forecast

Corning Inc., H-model

Microsoft Excel
Year Value gt
1 g1 0.18%
2 g2 2.55%
3 g3 4.92%
4 g4 7.29%
5 and thereafter g5 9.66%

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)
= 0.18% + (9.66% – 0.18%) × (2 – 1) ÷ (5 – 1)
= 2.55%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 0.18% + (9.66% – 0.18%) × (3 – 1) ÷ (5 – 1)
= 4.92%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 0.18% + (9.66% – 0.18%) × (4 – 1) ÷ (5 – 1)
= 7.29%