We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
O-I Glass (OI) Up 48% in a Year: What's Driving the Stock?
Read MoreHide Full Article
Shares of O-I Glass (OI - Free Report) have rallied approximately 48% in a year, faring way better than the industry’s 8.5% growth. The company has delivered year-over-year improvement in its top and bottom lines in the last five quarters. OI has been benefiting from higher prices and continued margin expansion initiatives. OI has a trailing four-quarter earnings surprise of 21%, on average.
Image Source: Zacks Investment Research
Upbeat Outlook
Backed by the performance in the first quarter of 2023, OI increased its guidance for adjusted earnings per share, free cash flow and adjusted free cash flow for 2023. The company now projects adjusted earnings per share to be in the range of $3.05 to $3.25 compared with prior guidance of at least $2.50 per share. The midpoint of the raised view indicates year-over-year growth of 37%.
The upbeat outlook reflects incremental net price realization as well as strong operating and cost performance. The company also updated its free cash flow guidance to at least $475 million, while free cash flow is expected at $175 million.
Operating costs are expected to benefit from continued margin expansion initiatives, which should mostly offset higher expenses associated with elevated asset project activity. Overall, all these factors are likely to contribute to higher earnings and adjusted free cash flow in 2023.
Rising Demand for Glass Bodes Well
Glass is increasingly becoming the preferred packaging choice for customers, given its endless recyclability without any loss in quality. Glass is gaining popularity as a healthy, premium and sustainable packaging solution for food and beverages.
O-I Glass is thus consistently investing in incremental capacity, joint ventures and acquisitions that will help meet this demand. To this end, OI intends to invest up to $630 million in new capacity expansion over the next three-year period, which is expected to generate an average internal return rate of 20%.
Strategic Initiatives to Aid Growth in Place
O-I Glass has embarked on a transformation plan for 2022 through 2024. It expects its margin expansion initiative to generate annual benefits of more than $100 million. It has completed its $1.5 billion portfolio optimization program, way ahead of schedule. Proceeds from the portfolio optimization program have been utilized to repay debt, fund attractive expansion projects and improve financial strength.
O-I Glass is firmly 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 OI’s furnaces. The MAGMA program is being implemented using a multi-generational development roadmap. The company’s Generation 1 solution met its expectations.
Generation 2 is expected to add new production capabilities, such as a flexible batch system, improved forming technology and modular inspection and packaging equipment, representing a complete end-to-end integrated production system. The piloting of key components is in progress and Generation 2 is expected to be ready for deployment in mid-2024.
Northbound Estimates
The Zacks Consensus Estimate for OI’s earnings for 2023 has moved up 23% over the past 30 days and is currently pegged at $3.17. The consensus mark for 2023 has also seen a northward revision of 17% to $3.08 per share. The change in the company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock.
Some other top-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. (WOR - Free Report) , AptarGroup, Inc. (ATR - Free Report) and Alamo Group (ALG - Free Report) , all of which flaunt a Zacks Rank #1 at present.
Worthington Industries has an average trailing four-quarter earnings surprise of 27.5%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.93 per share. The consensus estimate for 2023 earnings has moved north by 17.7% in the past 60 days. Its shares gained 28.5% in the last year.
AptarGroup has an average trailing four-quarter earnings surprise of 6.4%. The Zacks Consensus Estimate for ATR’s 2023 earnings is pegged at $4.04 per share. The consensus estimate for 2023 earnings has moved up by 5% in the past 60 days. ATR’s shares gained 14% in the past year.
The Zacks Consensus Estimate for Alamo Group’s 2023 earnings per share is pegged at $11.03. The consensus estimate for 2023 earnings rose 13% in the last 30 days. ALG has a trailing four-quarter average earnings surprise of 17.7%. Its shares soared 58% in the last year.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
O-I Glass (OI) Up 48% in a Year: What's Driving the Stock?
Shares of O-I Glass (OI - Free Report) have rallied approximately 48% in a year, faring way better than the industry’s 8.5% growth. The company has delivered year-over-year improvement in its top and bottom lines in the last five quarters. OI has been benefiting from higher prices and continued margin expansion initiatives. OI has a trailing four-quarter earnings surprise of 21%, on average.
Image Source: Zacks Investment Research
Upbeat Outlook
Backed by the performance in the first quarter of 2023, OI increased its guidance for adjusted earnings per share, free cash flow and adjusted free cash flow for 2023. The company now projects adjusted earnings per share to be in the range of $3.05 to $3.25 compared with prior guidance of at least $2.50 per share. The midpoint of the raised view indicates year-over-year growth of 37%.
The upbeat outlook reflects incremental net price realization as well as strong operating and cost performance. The company also updated its free cash flow guidance to at least $475 million, while free cash flow is expected at $175 million.
Operating costs are expected to benefit from continued margin expansion initiatives, which should mostly offset higher expenses associated with elevated asset project activity. Overall, all these factors are likely to contribute to higher earnings and adjusted free cash flow in 2023.
Rising Demand for Glass Bodes Well
Glass is increasingly becoming the preferred packaging choice for customers, given its endless recyclability without any loss in quality. Glass is gaining popularity as a healthy, premium and sustainable packaging solution for food and beverages.
O-I Glass is thus consistently investing in incremental capacity, joint ventures and acquisitions that will help meet this demand. To this end, OI intends to invest up to $630 million in new capacity expansion over the next three-year period, which is expected to generate an average internal return rate of 20%.
Strategic Initiatives to Aid Growth in Place
O-I Glass has embarked on a transformation plan for 2022 through 2024. It expects its margin expansion initiative to generate annual benefits of more than $100 million. It has completed its $1.5 billion portfolio optimization program, way ahead of schedule. Proceeds from the portfolio optimization program have been utilized to repay debt, fund attractive expansion projects and improve financial strength.
O-I Glass is firmly 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 OI’s furnaces. The MAGMA program is being implemented using a multi-generational development roadmap. The company’s Generation 1 solution met its expectations.
Generation 2 is expected to add new production capabilities, such as a flexible batch system, improved forming technology and modular inspection and packaging equipment, representing a complete end-to-end integrated production system. The piloting of key components is in progress and Generation 2 is expected to be ready for deployment in mid-2024.
Northbound Estimates
The Zacks Consensus Estimate for OI’s earnings for 2023 has moved up 23% over the past 30 days and is currently pegged at $3.17. The consensus mark for 2023 has also seen a northward revision of 17% to $3.08 per share. The change in the company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock.
Zacks Rank & Other Key Picks
OI currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Some other top-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. (WOR - Free Report) , AptarGroup, Inc. (ATR - Free Report) and Alamo Group (ALG - Free Report) , all of which flaunt a Zacks Rank #1 at present.
Worthington Industries has an average trailing four-quarter earnings surprise of 27.5%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.93 per share. The consensus estimate for 2023 earnings has moved north by 17.7% in the past 60 days. Its shares gained 28.5% in the last year.
AptarGroup has an average trailing four-quarter earnings surprise of 6.4%. The Zacks Consensus Estimate for ATR’s 2023 earnings is pegged at $4.04 per share. The consensus estimate for 2023 earnings has moved up by 5% in the past 60 days. ATR’s shares gained 14% in the past year.
The Zacks Consensus Estimate for Alamo Group’s 2023 earnings per share is pegged at $11.03. The consensus estimate for 2023 earnings rose 13% in the last 30 days. ALG has a trailing four-quarter average earnings surprise of 17.7%. Its shares soared 58% in the last year.