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Bear of the Day: O-I Glass, Inc. (OI)

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O-I Glass, Inc. ((OI - Free Report) ) is a leading producer of glass bottles and jars. The stock has tumbled since last summer alongside its fading earnings estimates.

O-I’s earnings outlook took another turn for the worse following its Q1 2024 release at the end of April.

O-I Glass 101

O-I Glass is a leading producer of glass bottles and jars. The firm works with some of the top food and beverage brands across many different regions throughout the world.

O-I’s business is hardly flashy, but it is not going out of style since glass is one of the most sustainable rigid packaging materials. The Ohio-based firm operates 68 plants across 19 countries.

O-I Glass posted a strong three-year stretch of earnings and revenue expansion between 2021 and 2023. It ended 2023 on a downbeat note in the fourth quarter and its Q1 2024 revenue fell 13% YoY. The drop in sales reflected “slightly lower average selling prices and a 12.5% decline in sales volume.”

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O-I’s adjusted earnings tumbled from $1.29 per share in the year-ago period to $0.45 a share. O-I’s consensus earnings estimate for 2024 has tumbled 29% since its Q1 release, with its FY25 outlook 21% lower.

The recent downward revisions are part of a year-long trend that’s seen its FY24 consensus slide 40% from $3.09 to its current $1.67 a share. O-I's overall EPS revisions trends help it earn a Zacks Rank #5 (Strong Sell).

O-I is projected to post a 1% drop in 2024 sales and 46% lower adjusted earnings. “Lower results primarily reflected the current market downturn that has impacted shipment levels due to softer consumer consumption and inventory destocking across the value chain,” CEO Andres Lopez said in prepared remarks.

Bottom Line

O-I stock has fallen 45% since July 2023, including a 23% YTD drop. O-I is also down 60% during the past decade to lag far behind the Zacks Industrial Products sector’s 63% climb. The stock is trading below its 50-week and 200-week moving averages.

That said, O-I is trading near historically oversold RSI levels. O-I’s chief executive said last quarter that it saw a “gradual improvement in our year-over-year glass shipment trends since the fourth quarter of 2023.” Still, it might be best to stay away from O-I until it proves a turnaround is around the corner. 

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