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Why Is O-I Glass (OI) Down 11.2% 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 lost about 11.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is O-I Glass due for a breakout? 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 catalysts.
O-I Glass' Q4 Earnings and Revenues Beat Estimates
O-I Glass reported fourth-quarter 2021 adjusted earnings of 36 cents, which surpassed the Zacks Consensus Estimate of 32 cents. Earnings came in higher than the company’s guidance between 30 cents and 35 cents. On a year-over-year basis, earnings declined 10% as gains from higher sales volumes and production as well as margin expansion initiatives were offset by unfavorable foreign currency translation, inflated costs, and expenses associated with increased engineering project activity, primarily in the Americas.
Including one-time items, OI reported earnings per share of 27 cents for the quarter under review versus a loss per share of 18 cents in the prior-year period.
Operational Update
Revenues increased 6% year over year to $1.6 billion for the quarter under review and beat the Zacks Consensus Estimate of $1.5 billion. Excluding the impact of recent divestitures, average selling prices increased 4.5% and contributed $67 million to sales, while shipments were up 5.4%, boosting net sales by $55 million. Meanwhile, unfavorable foreign currency translation had a negative impact of $30 million. Net sales from technical services improved $7 million due to higher engineering project activity.
Cost of sales was up 10% year over year to $1,350 million. Gross profit declined 10% year on year to $238 million. Gross margin was 15% for the quarter under review compared with 17.7% in the prior-year period. Selling and administrative expenses flared up 13.7% year over year to $108 million.
Segment operating profit amounted to $177 million for the reported quarter, down from the prior-year period’s $200 million. The segment operating margin was 11.1%, reflecting a 230-basis point contraction year over year.
Segmental Performance
Net sales in the Americas segment grew 3% year over year to $906 million for the fourth quarter. Operating profit, however, plunged 22% year over year to $99 million.
Net sales in the Europe segment were $647 million for the reported quarter, up 10% year over year. The segment’s operating profit also improved 7% year over year to $78 million.
Financial Update
O-I Glass had cash and cash equivalents of $725 million at 2021-end, up from the $563 million at 2020-end. The company generated $680 million of cash from operating activities in 2021 compared with the prior year’s $457 million. Free cash flow for 2021 was $282 million, higher than the figure of $146 million in 2020.
Its long-term debt was $4.75 billion as of Dec 31, 2021, down from $4.94 billion in the corresponding period of 2020.
As part of the ongoing portfolio optimization program, O-I Glass announced the completion of $1.1 billion of asset sales to date. It expects to complete the $1.5-billion portfolio optimization program this year.
Fiscal 2021 Performance
For fiscal 2021, O-I Glass’ adjusted earnings were $1.83, which surpassed the Zacks Consensus Estimate of $1.80. It also marked a 50% improvement from the last year aided by higher shipment and production and gains from margin expansion initiatives. OI expects adjusted earnings per share between $1.77 and $1.82 for the year.
Including one-time items, the company’s earnings were $88 cents per share for fiscal 2021 compared with $1.57 in fiscal 2020.
Total revenues advanced 4% year over year to around $6.36 billion, outpacing the Zacks Consensus Estimate of $6.29 billion.
Outlook for 2022
For 2022, O-I Glass expects strong demand for healthy, sustainable glass containers to continue, thereby supporting its earnings. The company projects adjusted earnings per share between $1.85 and $2.00 for the current year. The midpoint of the guidance indicates year-over-year growth of 5%. It expects higher selling prices to help offset cost inflation. Sales volume growth (in tons) is projected at 1%. OI expects margin expansion initiatives to deliver at least $50 million of benefits through the year. These incremental savings should more than offset the headwind from cost attributed to expansion project activity.
For the current quarter, the company anticipates adjusted earnings between 38 cents and 43 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, O-I Glass has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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. Notably, O-I Glass has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is O-I Glass (OI) Down 11.2% Since Last Earnings Report?
It has been about a month since the last earnings report for O-I Glass (OI - Free Report) . Shares have lost about 11.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is O-I Glass due for a breakout? 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 catalysts.
O-I Glass' Q4 Earnings and Revenues Beat Estimates
O-I Glass reported fourth-quarter 2021 adjusted earnings of 36 cents, which surpassed the Zacks Consensus Estimate of 32 cents. Earnings came in higher than the company’s guidance between 30 cents and 35 cents. On a year-over-year basis, earnings declined 10% as gains from higher sales volumes and production as well as margin expansion initiatives were offset by unfavorable foreign currency translation, inflated costs, and expenses associated with increased engineering project activity, primarily in the Americas.
Including one-time items, OI reported earnings per share of 27 cents for the quarter under review versus a loss per share of 18 cents in the prior-year period.
Operational Update
Revenues increased 6% year over year to $1.6 billion for the quarter under review and beat the Zacks Consensus Estimate of $1.5 billion. Excluding the impact of recent divestitures, average selling prices increased 4.5% and contributed $67 million to sales, while shipments were up 5.4%, boosting net sales by $55 million. Meanwhile, unfavorable foreign currency translation had a negative impact of $30 million. Net sales from technical services improved $7 million due to higher engineering project activity.
Cost of sales was up 10% year over year to $1,350 million. Gross profit declined 10% year on year to $238 million. Gross margin was 15% for the quarter under review compared with 17.7% in the prior-year period. Selling and administrative expenses flared up 13.7% year over year to $108 million.
Segment operating profit amounted to $177 million for the reported quarter, down from the prior-year period’s $200 million. The segment operating margin was 11.1%, reflecting a 230-basis point contraction year over year.
Segmental Performance
Net sales in the Americas segment grew 3% year over year to $906 million for the fourth quarter. Operating profit, however, plunged 22% year over year to $99 million.
Net sales in the Europe segment were $647 million for the reported quarter, up 10% year over year. The segment’s operating profit also improved 7% year over year to $78 million.
Financial Update
O-I Glass had cash and cash equivalents of $725 million at 2021-end, up from the $563 million at 2020-end. The company generated $680 million of cash from operating activities in 2021 compared with the prior year’s $457 million. Free cash flow for 2021 was $282 million, higher than the figure of $146 million in 2020.
Its long-term debt was $4.75 billion as of Dec 31, 2021, down from $4.94 billion in the corresponding period of 2020.
As part of the ongoing portfolio optimization program, O-I Glass announced the completion of $1.1 billion of asset sales to date. It expects to complete the $1.5-billion portfolio optimization program this year.
Fiscal 2021 Performance
For fiscal 2021, O-I Glass’ adjusted earnings were $1.83, which surpassed the Zacks Consensus Estimate of $1.80. It also marked a 50% improvement from the last year aided by higher shipment and production and gains from margin expansion initiatives. OI expects adjusted earnings per share between $1.77 and $1.82 for the year.
Including one-time items, the company’s earnings were $88 cents per share for fiscal 2021 compared with $1.57 in fiscal 2020.
Total revenues advanced 4% year over year to around $6.36 billion, outpacing the Zacks Consensus Estimate of $6.29 billion.
Outlook for 2022
For 2022, O-I Glass expects strong demand for healthy, sustainable glass containers to continue, thereby supporting its earnings. The company projects adjusted earnings per share between $1.85 and $2.00 for the current year. The midpoint of the guidance indicates year-over-year growth of 5%. It expects higher selling prices to help offset cost inflation. Sales volume growth (in tons) is projected at 1%. OI expects margin expansion initiatives to deliver at least $50 million of benefits through the year. These incremental savings should more than offset the headwind from cost attributed to expansion project activity.
For the current quarter, the company anticipates adjusted earnings between 38 cents and 43 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, O-I Glass has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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. Notably, O-I Glass has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.