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Why Is O-I Glass (OI) Up 4.3% Since Last Earnings Report?

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It has been about a month since the last earnings report for O-I Glass (OI - Free Report) . Shares have added about 4.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is O-I Glass due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

O-I Glass Beats on Q2 Earnings & Sales, Hikes 2021 View

O-I Glass reported second-quarter 2021 adjusted earnings of 54 cents per share compared with the prior-year quarter’s 1 cent per share. The bottom line surpassed the Zacks Consensus Estimate of 47 cents and exceeded management’s guidance of earnings between 45 cents and 50 cents. The upbeat results resulted from improved sales and production volumes as well as solid operating and cost performance.

Including one-time items, the company reported earnings per share of 73 cents in the quarter, against the loss per share of 64 cents posted in the prior-year quarter.

Operational Update

Revenues improved 17% year over year to $1,660 million during the June-end quarter. Excluding the impact of recent divestitures, sales volume was up 18% from the prior-year period. The top line also surpassed the Zacks Consensus Estimate of $1,570 million.

Cost of sales was up 8% year over year to $1,354 million. Gross profit jumped a whopping 88% year on year to $306 million. Selling and administrative expenses flared up 19.5% year over year to $116 million.

Segment operating profit amounted to $232 million in the reported quarter, up from the prior-year quarter’s $99 million.

Segmental Performance

Net sales in the Americas segment grew 23% year over year to $890 million in the second quarter. Operating profit surged 138% year on year to $124 million.

Net sales in the Europe segment were $745 million in the reported quarter, up 34% year over year. The segment’s operating profit soared 157% year over year to $108 million.

Financial Update

O-I Glass had cash and cash equivalents of $531 million at the end of the second quarter of 2021, down from the $1,067 million witnessed at the end of the prior year quarter. The company generated $199 million of cash from operating activities in the second quarter of 2021 compared with the prior-year quarter’s $181 million. Its long-term debt was at $5 billion as of Jun 30, 2021, down from $6 billion as of Jun 30, 2020.

Outlook

O-I Glass now projects adjusted earnings per share to lie between $1.65 and $1.75 for the ongoing year. It expects to generate free cash flow of $260 million in 2021.

For the current quarter, the company anticipates adjusted earnings between 47 cents and 52 cents per share. Higher selling prices are expected to offset cost inflation. It expects 8-10% production volume improvement from the prior-year quarter. The benefit of higher production will likely offset higher maintenance and asset project activity expenses. The current year’s results will also reflect cost savings from the company’s Margin Expansion initiatives.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, O-I Glass has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise O-I Glass has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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