We believe that corning stock (NYSE:GLW) is currently a better option West Pharmaceutical Services Stock (NYSE: WST), a global solutions provider for medicines, biologics, gene therapies and consumer health care products. Although these companies are from different sectors, we compare them because they have similar market capitalizations of around $30 billion.
Interestingly, the GLW has a sharper ratio 0.2 Since the beginning of 2017, there is less than 0.9 figure for wst and 0.6 for the S&P 500 index over the same period. It is compared to Sharp of 1.3 For Trefis Reinforced Value Portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.
The decision to invest often depends on finding the best stock within the parameters of certain characteristics to suit the investment style. The size of profits may matter, as larger profits may indicate greater market power. Since these stocks are from different sectors, comparing P/S with each other may not be helpful. We compare their current multiples to historical multiples in the sections below to better gauge their valuations.
Looking at stock returns, WST has outperformed GLW and the broader markets amid upbeat performance from its proprietary products business. While GLW is down 1% this year, the S&P500 index is up 16%, and WST is up 68%. There’s more to the comparison, and in the sections below, we discuss why we believe GLW will outperform WST over the next three years. We compare multiple factors, such as historical revenue growth, returns and valuation, in an interactive dashboard analysis. Corning v. West Pharmaceutical Services
, Which stock is a better bet? Parts of the analysis are summarized below.
1. West Pharmaceutical Services’ revenue growth is better
- Corning’s revenue growth has been slower than West Pharmaceutical Services. Corning’s sales are expected to grow at an average annual growth rate of 7.9% to $14.2 billion in 2022, compared to $11.5 billion in 2019, while the latter’s sales are expected to grow at an average annual growth rate of 16.8% to $2.9 billion in 2022, which In 2019 it was $1.8 billion.
- Corning’s revenue growth in recent years was partly driven by growing demand for gasoline particulate filters, given the increased adoption of emissions regulations in Europe and China.
- Corning has benefited from increased demand for optical fiber as carriers continue to expand their 5G coverage. However, its display technology sales have declined due to volume decline and lower demand in the smartphone, tablet and notebook markets, impacting the special content business.
- Additionally, supply chain disruptions and the impact of the lockdown in China have weighed on its top-line growth in recent times.
- West Pharmaceutical Services saw expansion in sales of its proprietary products, including Waystar and NovaPure, as well as solid demand for its COVID-19 vaccine and treatment-related products.
- Although demand for COVID-19-related products is declining, sales of its proprietary products have not declined meaningfully in recent quarters, due to price increases and higher sales of non-COVID-related products.
- Our Corning Revenue Comparison And West Pharmaceutical Services Revenue Comparison Dashboards provide more details on companies’ revenues.
- The table below summarizes our revenue expectations for both companies over the next three years and points to a CAGR of 4.6% for Corning compared to a CAGR of 5.6% for West Pharmaceutical Services.
- Note that we have different methodologies when forecasting future revenues for companies that are negatively impacted by COVID and companies that are not impacted or positively impacted by COVID. For companies negatively impacted by Covid, we consider the quarterly revenue recovery trajectory to predict improvement over pre-Covid revenue run rates. Beyond the recovery point, we apply the average annual growth observed three years before Covid to simulate a return to normal circumstances. For companies that recorded positive revenue growth during Covid, we consider the annual average growth before Covid, with a certain weighting on growth during Covid and the preceding twelve months.
2. WST is more profitable
- Corning’s operating margin has declined from 15.6% in 2019 to 14.7% in 2022, while West Pharmaceutical Services’ operating margin has increased from 16.1% to 25.4% over the period.
- Looking at the trailing twelve month period, its operating margin of 22.8% is better than Corning’s 8.2%.
- Our Corning Operating Income Comparison And West Pharmaceuticals Services Operating Income Comparison There are more details in the dashboard.
- Considering the financial risk, WST fares much better. Its 1% debt as a percentage of equity is much less than Corning’s 28%. Additionally, its 22% cash as a percentage of assets is better than the 5% for Corning, meaning West Pharmaceutical Services has a better debt position and greater cash cushion.
3. The web of it all
- We see that WST has seen better revenue growth, is more profitable and has a better financial position.
- However, given the high volatility in P/E and P/EBIT, given the prospects using the P/S as a basis, we believe that Corning is currently undervalued, given its superior valuation. Is the better option between the two.
- If we compare the current valuation multiples to the historical average, GLW is outperforming what its stock is currently trading at. 2.0x Revenue versus average of last five years 2.4x. In contrast, WST stock trades on 10.2x Past revenue compared to the average of the last five years 8.9x,
- Our Corning valuation ratio comparison And West Pharmaceutical Services Valuation Ratio Comparison There are more details.
- The table below summarizes our revenue and return expectations for both companies over the next three years and points to expected returns 15% Vs A for GLW in this period 3% Expected Returns for WST Stock Based on Trefis Machine Learning Analysis – Corning v. West Pharmaceuticals Services – which also provides more details about how we arrive at these numbers.
While GLW stock may outperform WST, it would be helpful to see how Corning Partners Fares matter on metrics. You’ll find other valuable comparisons for companies in different industries here peer comparison,
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