Corning Incorporated (NYSE: GLW) has recently experienced a decline in its stock price due to various challenges. However, I firmly believe that these obstacles are temporary and not indicative of a long-term trend. In fact, there are several compelling factors that make Corning an attractive option for investors.

To begin with, Corning offers a solid 3.5% dividend yield, which is an impressive figure. Moreover, the stock has the potential for over 20% upside, making it an enticing prospect. These benefits alone outweigh the risks and headwinds currently faced by the company.

Corning boasts a rich history that dates back to 1851. Today, it stands as a prominent global supplier of precision glass for liquid crystal displays and holds a leadership position in the optical fiber and cable market. The company operates across various segments, including Optical Communications, Display Technologies, Specialty Materials, Environmental Technologies, and Life Sciences. This diversification ensures a relatively balanced revenue stream, with Optical Communications constituting the largest segment, accounting for 35% of the total.

While Corning, like any other company, is not immune to risks, such as technological risks and supply-chain disruptions, I am confident in the company’s ability to effectively manage these challenges. It’s worth noting that approximately 30% of Corning’s revenues are generated in China, exposing it to geopolitical risks. However, the potential rewards outweigh these risks, making Corning an enticing investment option.

Now, let’s examine the financials. Over the past decade, Corning has consistently demonstrated steady revenue growth of around 7%. Although costs have outpaced this growth, resulting in a decline in gross margins, the company has consistently rewarded shareholders through dividends and share repurchases. Corning has an impressive track record of 12 consecutive years of dividend growth, and the current forward dividend yield exceeds 3.5%.

Analyzing the balance sheet, Corning appears to be in a healthy position with over $1 billion in outstanding cash and moderate leverage metrics. While there is a significant difference between the current and quick ratios, primarily due to softening demand, I view this as a temporary situation rather than a long-term concern.

In recent quarters, Corning has faced headwinds stemming from weakening demand across its end markets, particularly in display and mobile communications. Nevertheless, the company’s management has proactively implemented measures such as pricing adjustments and improved productivity to address these challenges. Consequently, sequential revenue growth is expected in the upcoming earnings, which could mark a positive turning point for the company.

When it comes to valuation, Corning’s stock appears to be undervalued. Current multiples are mostly lower than the sector median and the company’s own 5-year average valuation ratios. Furthermore, employing a discounted cash flow (DCF) model and a discounted dividend model (DDM) valuation approach suggests substantial upside potential for the stock.

Of course, it’s important to acknowledge the risks associated with investing in Corning. The company faces technological risks, supply-chain disruptions, foreign exchange uncertainties, and geopolitical tensions, particularly given its significant presence in China. However, with prudent risk management, I firmly believe that the potential rewards outweigh these concerns.