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O-I Glass (OI) Gains on Solid Demand Despite Cost Hurdles
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O-I Glass, Inc. (OI - Free Report) is well-poised to benefit from the growing consumer preference for glass as the healthy, premium and sustainable packaging option for food and beverage. Its continuous investment in incremental capacity will enable it to capitalize on demand. OI’s ongoing divestiture program, acquisitions and product innovations are key growth drivers. Cost-control actions, and efforts to improve productivity and efficiency are driving growth.
Upbeat Outlook for 2022
For 2022, O-I Glass expects adjusted earnings per share (EPS) between $1.85 and $2.00. The mid-point of the guidance indicates growth of 5% from adjusted EPS of $1.83 in 2021. Earnings will benefit from higher sales volume and selling prices, as well as its efforts to improve productivity and efficiency.
Capacity Expansion to Meet Growing Demand
Banking on the increasing preference for glass over plastic as a healthy, premium and sustainable alternative option, O-I Glass has been investing in incremental capacity, joint ventures and acquisitions in emerging geographies. The company is building new capacity that will come online in early 2023 to serve premium categories in attractive, emerging markets.
O-I Glass is undertaking initiatives as part of its transformation plan for 2022 through 2024. The company expects its margin expansion initiative to generate annual benefits of $50 million between 2022 and 2024. Per the company’s portfolio optimization program, it intends to invest up to $680 million in new capacity expansion over the next three years period to achieve volume growth and meet demand. The MAGMA program, or OI’s glass melting technology, helps to reduce the amount of capital required to install, rebuild and operate the company’s furnaces.
O-I Glass has already generated $1.3 billion of proceeds under its ongoing portfolio optimization program to exit non-core operations and invest in its core business. It is set to achieve its targeted $1.5 billion by the end of this year — way ahead of its original target of 2024. Proceeds from the program will be utilized to fund expansion projects and improve financial strength.
Innovations in Glass Packaging to Aid Growth
The company has been focused on driving innovation. Its glass melting technology, known as the MAGMA program, aids in reducing the amount of capital required to install, rebuild and operate the company’s furnaces. Its full-scale commercial MAGMA Gen 1 production line is operational, and the company achieved critical milestones in 2021. Its Gen 2 MAGMA line in Streator, IL, is currently in the testing phase. The company continues to make solid progress in developing Gen 3. The portfolio optimization program plan includes an addition of up to 11 MAGMA lines.
However, there are a few factors that might impact the company’s results.
OI is bearing the brunt of supply chain challenges, which are likely to impact shipment levels. The company is witnessing higher freight and energy costs. Impacts of divestitures, incremental expenses to fund Paddock Trust, and the unfavorable impact of foreign currency translation are likely to impact bottom-line results in the current year.
Price Performance
O-I Glass’ shares have gained 18.4% so far this year, against the industry’s decline of 11.9%.
Zacks Rank & Stocks to Consider
O-I Glass currently carries a Zacks Rank #3 (Hold).
Greif has an estimated earnings growth rate of 36% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.
Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. The company’s shares have gained 5% in the last six months.
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 15% in the past 60 days.
MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have increased 13.4% so far this year.
Titan International has an estimated earnings growth rate of 112% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 55%.
Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have surged 29.3% year to date.
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O-I Glass (OI) Gains on Solid Demand Despite Cost Hurdles
O-I Glass, Inc. (OI - Free Report) is well-poised to benefit from the growing consumer preference for glass as the healthy, premium and sustainable packaging option for food and beverage. Its continuous investment in incremental capacity will enable it to capitalize on demand. OI’s ongoing divestiture program, acquisitions and product innovations are key growth drivers. Cost-control actions, and efforts to improve productivity and efficiency are driving growth.
Upbeat Outlook for 2022
For 2022, O-I Glass expects adjusted earnings per share (EPS) between $1.85 and $2.00. The mid-point of the guidance indicates growth of 5% from adjusted EPS of $1.83 in 2021. Earnings will benefit from higher sales volume and selling prices, as well as its efforts to improve productivity and efficiency.
Capacity Expansion to Meet Growing Demand
Banking on the increasing preference for glass over plastic as a healthy, premium and sustainable alternative option, O-I Glass has been investing in incremental capacity, joint ventures and acquisitions in emerging geographies. The company is building new capacity that will come online in early 2023 to serve premium categories in attractive, emerging markets.
O-I Glass is undertaking initiatives as part of its transformation plan for 2022 through 2024. The company expects its margin expansion initiative to generate annual benefits of $50 million between 2022 and 2024. Per the company’s portfolio optimization program, it intends to invest up to $680 million in new capacity expansion over the next three years period to achieve volume growth and meet demand. The MAGMA program, or OI’s glass melting technology, helps to reduce the amount of capital required to install, rebuild and operate the company’s furnaces.
O-I Glass has already generated $1.3 billion of proceeds under its ongoing portfolio optimization program to exit non-core operations and invest in its core business. It is set to achieve its targeted $1.5 billion by the end of this year — way ahead of its original target of 2024. Proceeds from the program will be utilized to fund expansion projects and improve financial strength.
Innovations in Glass Packaging to Aid Growth
The company has been focused on driving innovation. Its glass melting technology, known as the MAGMA program, aids in reducing the amount of capital required to install, rebuild and operate the company’s furnaces. Its full-scale commercial MAGMA Gen 1 production line is operational, and the company achieved critical milestones in 2021. Its Gen 2 MAGMA line in Streator, IL, is currently in the testing phase. The company continues to make solid progress in developing Gen 3. The portfolio optimization program plan includes an addition of up to 11 MAGMA lines.
However, there are a few factors that might impact the company’s results.
OI is bearing the brunt of supply chain challenges, which are likely to impact shipment levels. The company is witnessing higher freight and energy costs. Impacts of divestitures, incremental expenses to fund Paddock Trust, and the unfavorable impact of foreign currency translation are likely to impact bottom-line results in the current year.
Price Performance
O-I Glass’ shares have gained 18.4% so far this year, against the industry’s decline of 11.9%.
Zacks Rank & Stocks to Consider
O-I Glass currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Greif Inc. (GEF - Free Report) , Myers Industries (MYE - Free Report) and Titan International , each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif has an estimated earnings growth rate of 36% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.
Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. The company’s shares have gained 5% in the last six months.
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 15% in the past 60 days.
MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have increased 13.4% so far this year.
Titan International has an estimated earnings growth rate of 112% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 55%.
Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have surged 29.3% year to date.