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O-I Glass (OI) Ups Q2 Guidance on Improved Glass Shipments
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O-I Glass, Inc. (OI - Free Report) provided a business update for second-quarter 2022. The company now expects adjusted earnings per share (EPS) for the second quarter to be more than the mid-point of the last reported quarter’s guidance of 55-60 cents per share. Adjusted earnings for the June-end quarter will exceed 65 cents per share.
The largest glass container manufacturer’s upbeat guidance can be attributed to improved glass container shipments for the second quarter. Glass container shipments (in tons) are up about 1% so far this quarter through May. This is in line with the company’s prior quarter’s expectations of low-single digits growth. The stronger performance demonstrates O-I Glass’ favorable operating performance and higher net price. Glass Shipments increased 5.3% in 2021 on underlying glass demand. This continued in the first quarter of 2022 as well, as evident from growth of 6.4%.
O-I Glass continues to expect current-year adjusted EPS between $1.85 and $2.10. The midpoint of the guidance indicates growth of 8% from the adjusted EPS of $1.83 in 2021. Earnings will benefit from higher sales volume and continued strong demand for healthy and sustainable glass containers. Higher selling prices are likely to negate the impact of cost inflation. Benefits from its margin expansion initiatives, through improving productivity, operating performance and cost management, will also drive bottom-line growth for the year.
O-I Glass is poised well to gain from the growing demand for glass on consumer preference for healthy, premium and sustainable products for food and beverage. It is thus investing in incremental capacity, joint ventures and acquisitions in emerging geographies to capitalize on this trend. The company plans to invest up to $680 million in new capacity through 2024 to achieve volume growth and meet demand. These investments are anticipated to generate an average internal rate of return of 20%. Its margin expansion initiative is likely to generate annual benefits of $50 million from 2022 to 2024.
Glass packaging in Western Europe has been growing for the last few years. Premium products in Europe are growing significantly faster than the overall market. The company’s efforts to add capacity in Europe, brownfield expansion, supply chain performance, focusing on growing strategic relationships and footprint optimization poises it well for growing volumes and expanding margins in the region. In the United States, demand for glass is growing on favorable consumer trends and increased customers’ preference for glass packaging. Non-beer categories in the United States continue to grow at low-single digits over time. Consequently, the company has focused on food, non-alcoholic beverages and wine and spirits by improving customer relationships, commercial and design capabilities and converting almost 20% of its beer capacity into a flexible capacity to meet non-beer customer demand.
Price Performance
O-I Glass’ shares have gained 41.1% so far this year compared with the industry’s growth of 1.4%.
Some other top-ranked stocks in the Industrial Products sector are Graphic Packaging Holding Company (GPK - Free Report) , Myers Industries (MYE - Free Report) and Packaging Corporation of America (PKG - Free Report) . While GPK & MYE flaunt a Zacks Rank #1, PKG carries a Zacks Rank #2, at present.
Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.
Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 14.8% in a year.
Myers Industries has an expected earnings growth rate of 67% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 27% in the past 60 days.
MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have gained 13% in the past year.
Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings rose 4.2% in the past 60 days.
PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have gained 4% in the past year.
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O-I Glass (OI) Ups Q2 Guidance on Improved Glass Shipments
O-I Glass, Inc. (OI - Free Report) provided a business update for second-quarter 2022. The company now expects adjusted earnings per share (EPS) for the second quarter to be more than the mid-point of the last reported quarter’s guidance of 55-60 cents per share. Adjusted earnings for the June-end quarter will exceed 65 cents per share.
The largest glass container manufacturer’s upbeat guidance can be attributed to improved glass container shipments for the second quarter. Glass container shipments (in tons) are up about 1% so far this quarter through May. This is in line with the company’s prior quarter’s expectations of low-single digits growth. The stronger performance demonstrates O-I Glass’ favorable operating performance and higher net price. Glass Shipments increased 5.3% in 2021 on underlying glass demand. This continued in the first quarter of 2022 as well, as evident from growth of 6.4%.
O-I Glass continues to expect current-year adjusted EPS between $1.85 and $2.10. The midpoint of the guidance indicates growth of 8% from the adjusted EPS of $1.83 in 2021. Earnings will benefit from higher sales volume and continued strong demand for healthy and sustainable glass containers. Higher selling prices are likely to negate the impact of cost inflation. Benefits from its margin expansion initiatives, through improving productivity, operating performance and cost management, will also drive bottom-line growth for the year.
O-I Glass is poised well to gain from the growing demand for glass on consumer preference for healthy, premium and sustainable products for food and beverage. It is thus investing in incremental capacity, joint ventures and acquisitions in emerging geographies to capitalize on this trend. The company plans to invest up to $680 million in new capacity through 2024 to achieve volume growth and meet demand. These investments are anticipated to generate an average internal rate of return of 20%. Its margin expansion initiative is likely to generate annual benefits of $50 million from 2022 to 2024.
Glass packaging in Western Europe has been growing for the last few years. Premium products in Europe are growing significantly faster than the overall market. The company’s efforts to add capacity in Europe, brownfield expansion, supply chain performance, focusing on growing strategic relationships and footprint optimization poises it well for growing volumes and expanding margins in the region. In the United States, demand for glass is growing on favorable consumer trends and increased customers’ preference for glass packaging. Non-beer categories in the United States continue to grow at low-single digits over time. Consequently, the company has focused on food, non-alcoholic beverages and wine and spirits by improving customer relationships, commercial and design capabilities and converting almost 20% of its beer capacity into a flexible capacity to meet non-beer customer demand.
Price Performance
O-I Glass’ shares have gained 41.1% so far this year compared with the industry’s growth of 1.4%.
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Zacks Rank & Other Stocks to Consider
O-I Glass currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the Industrial Products sector are Graphic Packaging Holding Company (GPK - Free Report) , Myers Industries (MYE - Free Report) and Packaging Corporation of America (PKG - Free Report) . While GPK & MYE flaunt a Zacks Rank #1, PKG carries a Zacks Rank #2, at present.
Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.
Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 14.8% in a year.
Myers Industries has an expected earnings growth rate of 67% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 27% in the past 60 days.
MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have gained 13% in the past year.
Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings rose 4.2% in the past 60 days.
PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have gained 4% in the past year.