Glass container manufacturer O-I Glass, Inc. (OI) in Perrysburg, Ohio, sells its products to food and beverage manufacturers, primarily in America, Europe, and Asia-Pacific. The company offers glass containers for alcoholic beverages, flavored malt beverages, spirits, glass packaging for food items, soft drinks, teas, juices, and pharmaceuticals. OI’s products are available in a range of sizes, shapes, and colors, and the company actively innovates and develops new products.
OI’s branch O-I Canada received CAD3.50 million ($2.77 million) from the Canadian government’s Canada Economic Development for Quebec Regions (CED) to moderniz its plant in Montreal. The company intends to acquire digital production equipment to increase the amount of recycled glass introduced into the plant’s production line. Nicola Porrazzo, Senior Plant Manager at O-I Canada, said, “Our partnership with CED will bring transformative innovations to our glassmaking capabilities that will heighten our sustainability ambitions for generations to come.”
The company announced that it would post its first-quarter earnings results on April 25. OI has set its adjusted EPS guidance for the quarter at $0.38 - $0.43 and $1.85 - $2.00 for its fiscal year 2022. OI’s stock has gained 8.9% in price year-to-date, outperforming the S&P 500’s 7.8% decline over the same period, and 2.5% decline over the past month to close the last trading session at $13.10. The stock is up 3% in price over the past five days. However, the stock declined 1.6% intraday.
Impressive Financials
For its fiscal fourth quarter, ended Dec. 31, OI’s net sales increased 6.1% year-over-year to $1.59 billion. Its net earnings and EPS came in at $43 million and $0.27, respectively, up substantially from their negative year-ago values. The company’s cash balance stood at $725 million, up 28.8% from the prior-year period.
Furthermore, OI’s trailing 12-month revenue and net income came in at $6.36 billion and 149 million, respectively, while its trailing 12-month EPS stood at $0.92. The company’s trailing 12-month levered free cash flow, and cash from operations, came in at $361.75 million and $687 million, respectively.
Affordable Valuations
In terms of its forward non-GAAP P/E, OI is trading at 6.88x, which is 47.3% lower than the 13.05x industry average. The stock’s 0.32 forward Price/Sales multiple is 78.5% lower than the 1.47 industry average. Its 3.81 forward Price/Cash Flow multiple is 50.9% lower than the 7.77 industry average.
Favorable Expectations
Analysts expect OI’s EPS to increase 14.3% and 7.4%, respectively, year-over-year for the quarter ended March 31, 2022, and the quarter ending June 30, 2022, to $0.40 and $0.58, respectively. The consensus revenue estimate of $1.55 billion and $1.69 billion for the same quarters reflects rises of 3.1% and 8.6%, respectively, from the prior-year period. Furthermore, its EPS is expected to grow 14.5% per annum over the next five years.
POWR Ratings Reflect Promising Prospects
OI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
OI has a B Growth grade, which is consistent with its significant bottom-line growth in the last reported quarter. The stock also has a B grade for Value, which is in sync with its lower than industry valuations.
OI is ranked #11 out of the 22 stocks in the Industrial – Packaging industry. The industry is rated B.
Click here to see the additional POWR Ratings for OI (Momentum, Stability, Sentiment, and Quality).
View all the top stocks in the Industrial – Packaging industry here.
Click here to check out our Industrial Sector Report for 2022
Bottom Line
OI registered solid growth in its last reported quarter, and analysts expect further improvement in its financials. Also, the stock looks undervalued at its current price and holds immense upside potential. Thus, we think it could be wise to scoop up OI shares now.
How Does O-I Glass, Inc. (OI) Stack Up Against its Peers?
While OI has an overall POWR Rating of B, one might consider looking at its industry peers, Vertiv Corporation (VRTV) and Smurfit Kappa Group PLC (SMFKY), which have an overall A (Strong Buy) rating, and Westrock Company (WRK) and Packaging Corporation of America (PKG), which have an overall B (Buy) rating.
OI shares were trading at $12.88 per share on Monday morning, down $0.22 (-1.68%). Year-to-date, OI has gained 7.07%, versus a -7.70% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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