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O-I Glass (OI) Stock Rallies 58% in 6 Months: Here's Why

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O-I Glass, Inc.’s (OI - Free Report) shares have gained 58% in the past six months, outperforming the industry’s growth of 30.4%. Meanwhile, the Industrial Products sector has gained 9.1% while the Zacks S&P 500 composite has lost 2.7% in the same time frame. Better-than-expected fourth-quarter results as well as an upbeat outlook for 2023, have contributed to OI’s price performance.

OI has a market capitalization of $3.51 billion. The average volume of shares traded in the last three months was 1.27 million.

The Zacks Consensus Estimate for 2023 and 2024 have both moved north by 2%, in the past 30 days, reflecting analysts’ optimism.

OI currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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What’s Driving the Stock?

O-I Glass reported fourth-quarter 2022 adjusted earnings per share of 38 cents, which was higher than the company’s guidance of 28-33 cents per share. On a year-over-year basis, earnings increased 6%. For 2022, O-I Glass’ adjusted earnings were $2.30, which reflected a 26% improvement from 2021, driven by solid net price realization, continued sales volume growth and favorable operating performance. The bottom line figure surpassed the company’s guidance of earnings per share between $2.20 and $2.25 for 2022.

For the first quarter of 2023, OI expects adjusted earnings between 80 cents and 85 cents per share. The company had reported earnings of 56 cents per share in the first quarter of 2022.

The company expects benefits from its margin expansion initiatives benefits should mostly offset higher expenses associated with elevated asset project activity. For 2023, O-I Glass projects adjusted earnings of more than $2.50 per share. Sales volume growth (in tons) is projected to be flat to up 1%. OI expects free cash flow in 2023 to be more than $150 million, while adjusted free cash flow is expected to be higher than $450 million.

The company is well-poised 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. OI has been making solid progress in its capital expansion program and will add new capacity this year. It recently broke ground on the first MAGMA greenfield project in Bowling Green, KY, which should be commissioned in mid-2024. O-I Glass expects to complete the multi-generation MAGMA development plan over the next few years.

Other Stocks to Consider

Some other top-ranked stocks in the Industrial Products sector are Alamo Group (ALG - Free Report) , Tenaris (TS - Free Report) and W.W. Grainger (GWW - Free Report) . All these stocks sport a Zacks Rank of 1 at present.

Alamo Group has an average trailing four-quarter earnings surprise of 6%. The Zacks Consensus Estimate for ALG’s 2023 earnings is pegged at $9.79 per share. This indicates a 13.6% increase from the prior-year reported figure. The consensus estimate has moved north by 7% in the past 30 days. ALG shares have gained 40% in the past six months.

Tenaris has an average trailing four-quarter earnings surprise of 11.5%. The Zacks Consensus Estimate for TS’ 2023 earnings is pegged at $6.12 per share. This indicates a 41.3% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved north by 18.1% in the past 60 days. Its shares gained 22.4% in the last year.

The Zacks Consensus Estimate for Grainger’s fiscal 2023 earnings per share is pegged at $33.03, suggesting an increase of 11.4% from that reported in the last year. The consensus estimate for fiscal 2023 earnings moved 1% upward in the last 30 days. GWW has a trailing four-quarter average earnings surprise of 9.8%. Its shares have gained 21% over the past six months.

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