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O-I Glass (OI) Up 2.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for O-I Glass (OI - Free Report) . Shares have added about 2.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is O-I Glass due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
O-I Glass Q1 Earnings & Revenues Beat Estimates, Up Y/Y
O-I Glass reported first-quarter 2023 adjusted earnings per share of $1.29, which beat the Zacks Consensus Estimate of 83 cents. On a year-over-year basis, earnings increased 130% reflecting strong net price realization, solid operating performance and benefits from OI’s ongoing margin expansion initiatives. The bottom line was also higher than the company’s most recent guidance of 80-85 cents per share.
Including one-time items, O-I Glass reported EPS of $1.29 for the quarter, compared with 55 cents in the prior-year quarter.
Operational Update
Revenues were $1.83 billion for the quarter under review, up 8.2% from the year-ago quarter’s level mainly due to higher selling prices. The top line surpassed the Zacks Consensus Estimate of $1.78 billion. Sales volume declined 8% in the quarter. Approximately 3-4% of the volume decline was attributed to a challenging prior year comparison while disruption from temporary external events affected volumes by 2%.
The cost of sales was down 3% year over year to $1,347 million. Gross profit increased 59% year over year to $484 million. The gross margin was 26.4% for the quarter under review, compared with 18% in the prior-year quarter. Selling and administrative expenses were up 23.5% year over year to $147 million. Adjusted segment operating profit amounted to $398 million for the reported quarter, up from the prior-year period’s $231 million. The segment operating margin was 22.1%, compared with the prior-year quarter’s 14%.
Segmental Performance
Net sales in the Americas segment rose 6.4% year over year to $1 billion for the first quarter. Operating profit was up 36% year over year to $176 million. Net sales in the Europe segment were $799 million for the reported quarter, up 12.9% year over year. The segment’s operating profit surged 118% year over year to $222 million.
Financial Update
O-I Glass had cash and cash equivalents of $480 million at the end of Mar 31, 2023, down from the $773 million at 2022-end. The company used $193 million of cash in operating activities in the quarter under review, compared with the prior-year quarter’s outflow of $73 million.
Its long-term debt was $4.42 billion as of Mar 31, 2023, up from $4.37 billion as of Dec 31, 2022.
Outlook
O-I Glass expects adjusted earnings in the range of $3.05 to $3.25 per share, higher than the previously provided expectation of more than $2.50 per share. OI had reported adjusted earnings per share of $2.30 in 2022. Sales volume growth (in tons) is projected to be down in low-single digit to mid-single digits. OI expects free cash flow in 2023 to be more than $175 million, while adjusted free cash flow is expected to be higher than $475 million.
For the second quarter of 2023, O-I Glass expects adjusted earnings between 80 cents and 85 cents per share, whereas it reported adjusted earnings of 73 cents per share in the prior-year quarter. Sales volume growth is anticipated to be down in the low to mid-single digits due to current inventory destocking actions and weak consumer demand in few markets. Inflated costs due to elevated project activity, unfavorable inventory valuation as well as higher interest expense are expected to hurt results. However, higher prices will help offset these negatives.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 10.67% due to these changes.
VGM Scores
At this time, O-I Glass has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, 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 D. 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. It comes with little surprise O-I Glass has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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O-I Glass (OI) Up 2.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for O-I Glass (OI - Free Report) . Shares have added about 2.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is O-I Glass due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
O-I Glass Q1 Earnings & Revenues Beat Estimates, Up Y/Y
O-I Glass reported first-quarter 2023 adjusted earnings per share of $1.29, which beat the Zacks Consensus Estimate of 83 cents. On a year-over-year basis, earnings increased 130% reflecting strong net price realization, solid operating performance and benefits from OI’s ongoing margin expansion initiatives. The bottom line was also higher than the company’s most recent guidance of 80-85 cents per share.
Including one-time items, O-I Glass reported EPS of $1.29 for the quarter, compared with 55 cents in the prior-year quarter.
Operational Update
Revenues were $1.83 billion for the quarter under review, up 8.2% from the year-ago quarter’s level mainly due to higher selling prices. The top line surpassed the Zacks Consensus Estimate of $1.78 billion. Sales volume declined 8% in the quarter. Approximately 3-4% of the volume decline was attributed to a challenging prior year comparison while disruption from temporary external events affected volumes by 2%.
The cost of sales was down 3% year over year to $1,347 million. Gross profit increased 59% year over year to $484 million. The gross margin was 26.4% for the quarter under review, compared with 18% in the prior-year quarter. Selling and administrative expenses were up 23.5% year over year to $147 million.
Adjusted segment operating profit amounted to $398 million for the reported quarter, up from the prior-year period’s $231 million. The segment operating margin was 22.1%, compared with the prior-year quarter’s 14%.
Segmental Performance
Net sales in the Americas segment rose 6.4% year over year to $1 billion for the first quarter. Operating profit was up 36% year over year to $176 million.
Net sales in the Europe segment were $799 million for the reported quarter, up 12.9% year over year. The segment’s operating profit surged 118% year over year to $222 million.
Financial Update
O-I Glass had cash and cash equivalents of $480 million at the end of Mar 31, 2023, down from the $773 million at 2022-end. The company used $193 million of cash in operating activities in the quarter under review, compared with the prior-year quarter’s outflow of $73 million.
Its long-term debt was $4.42 billion as of Mar 31, 2023, up from $4.37 billion as of Dec 31, 2022.
Outlook
O-I Glass expects adjusted earnings in the range of $3.05 to $3.25 per share, higher than the previously provided expectation of more than $2.50 per share. OI had reported adjusted earnings per share of $2.30 in 2022. Sales volume growth (in tons) is projected to be down in low-single digit to mid-single digits. OI expects free cash flow in 2023 to be more than $175 million, while adjusted free cash flow is expected to be higher than $475 million.
For the second quarter of 2023, O-I Glass expects adjusted earnings between 80 cents and 85 cents per share, whereas it reported adjusted earnings of 73 cents per share in the prior-year quarter. Sales volume growth is anticipated to be down in the low to mid-single digits due to current inventory destocking actions and weak consumer demand in few markets. Inflated costs due to elevated project activity, unfavorable inventory valuation as well as higher interest expense are expected to hurt results. However, higher prices will help offset these negatives.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 10.67% due to these changes.
VGM Scores
At this time, O-I Glass has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, 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 D. 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. It comes with little surprise O-I Glass has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.