Corning (NYSE: GLW) announced quarterly results that reflected an increasingly difficult selling environment. However the company was rescued by its balance sheet as it dramatically increased its capital allocation program. Mehdi Hosseini from Susquehanna published an earnings analysis discussing the pros and cons of Corrning's results.

Revenue of $2.45B was below consensus of $2.52B, due in part to a stronger dollar which had a negative effect of $57 million. EPS of $0.34 was in line with consensus aided by a lower share count.

Weaker global demand environment is expected to persist into 2016. For the December quarter, the company expects the glass market to be down 1-3% Q/Q, though Corning should fare better given the closure of a contract dispute (leading to some shipments pushed out from 3Q into 4Q). Glass ASPs are expected to decline by 1-3% Q/Q. Optical Communication is guided down 6-8% Q/Q, Environmental down high single digits Q/Q, Specialty Material (with Gorilla ~85% of the mix) down low single digits Q/Q, and Life Sciences down low single digits Q/Q.

Despite the difficult fundamental selling environment, since the shares are trading at just $4 above its trough multiple (1x book ), the stock represents a positive risk/reward at current levels.

The increased buyback program will reduce share count and flow through to EPS. Estimates have increased by 6% for CY16 and by 8% for CY17 to reflect the company's aggressive buyback program. For the December quarter, the analysts revenue/EPS estimates are $2.3B/$0.32, below street consensus of $2.5M/$0.34. However the lower share count allows him to iraise estimates slightly in the out year. For CY16 and CY17 EPS estimates are $1.39 and $1.52 compared to consensus of $1.49 and $1.51.

The firm maintained a Positive rating and $22 price target.

For an analyst ratings summary and ratings history on Corning click here. For more ratings news on Corning click here.

Shares of Corning closed at $18.26 yesterday.