Corning IncorporatedGLWNYSE

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DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $146.96 per share(market-calibrated)

+2.4%

Upside to Fair Value

Current

$143.50

Pure Model

$144.92

Fair Value

$146.96

Bull Case

$202.36

Bear Case

$100.33

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

5.18%

Calibrated Growth

3.96%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $144.92.

What's Driving This Ratingfor GLW

↓

CapEx normalizing toward maintenance

Historical CapEx is 8.80% of revenue (heavy investment phase). Model fades this to 6.00% by Year 10, freeing up ~$999M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 13.43% — below the sector mature average of 25.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $8.1B (22.57% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 19.34% in Year 1 to 3.75% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $106.81/share (21.4x terminal FCF) while exit multiple gives $183.03/share (40.7x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $143.50, the market implies 5.18% perpetual growth — 143bps above the model's 3.75%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 68.75% indicates efficient cash generation. FCF reaches $7.7B by Year 10 (21.68% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.02

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.10%

Cost of Debt

Pre-tax Cost of Debt3.10%

Tax Rate15.11%

After-tax Cost of Debt2.63%

Equity Weight (E/V)92.35%

Debt Weight (D/V)7.65%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (92.35% × 9.10%) + (7.65% × 2.63%)

= 8.60%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$18.7B	$25.5B	$29.7B	$31.9B	$35.7B
EBIT	$2.5B	$3.4B	$5.2B	$6.5B	$8.1B
Tax	$378M	$517M	$789M	$978M	$1.2B
NOPAT	$2.1B	$2.9B	$4.4B	$5.5B	$6.8B
+ Depreciation	$1.7B	$2.3B	$2.7B	$2.9B	$3.2B
- Capex	$1.6B	$2.1B	$2.2B	$2.2B	$2.1B
- Δ NWC	$371M	$535M	$132M	$142M	$158M
Free Cash Flow	$1.8B	$2.6B	$4.7B	$6.0B	$7.7B
Discount Factor	0.921	0.781	0.662	0.561	0.438
Present Value	$1.6B	$2.0B	$3.1B	$3.4B	$3.4B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$7.7B

Terminal Growth Rate3.75%

WACC8.60%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$165.2B

PV of Terminal Value$72.4B

Exit Multiple Method

Year 10 EBITDA$11.2B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$314.9B

PV of Terminal Value$137.9B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$28.2B

PV of Terminal Value$72.4B

Enterprise Value$100.6B

(-) Net Debt$8.7B

Equity Value$91.9B

Shares Outstanding860M

Price per Share$106.81

Exit Multiple Method

PV of Projected FCFs$28.2B

PV of Terminal Value$137.9B

Enterprise Value$166.1B

(-) Net Debt$8.7B

Equity Value$157.4B

Shares Outstanding860M

Price per Share$183.03

Pure Model Fair Value

$144.92

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
6.60%	$186.43	$196.21	$209.41	$228.21	$244.11
7.60%	$158.25	$163.75	$170.67	$179.66	$191.79
8.60%	$137.40	$140.81	$144.92	$149.98	$156.35
9.60%	$120.97	$123.23	$125.88	$129.02	$132.80
10.60%	$107.50	$109.07	$110.87	$112.95	$115.39

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$100.33

-30.1% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.28

Base Case

$144.92

1.0% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.02

Bull Case

$202.36

41.0% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 0.87

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth19.34%

Year 3 Revenue Growth20.61%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin13.43%

Terminal EBIT Margin25.00%

Tax Rate15.11%

Historical Capex / Rev8.80%

Terminal Capex / Rev6.00%

NWC / Revenue12.28%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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