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O-I Glass (OI) Up 0.8% 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 0.8% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
O-I Glass reported third-quarter 2023 adjusted earnings per share (EPS) of 80 cents, which beat the Zacks Consensus Estimate of earnings of 69 cents per share. On a year-over-year basis, earnings increased 27% reflecting strong net price realization, solid operating performance and benefits from OI’s ongoing margin expansion initiatives despite lower volumes. The bottom line was also higher than the company’s most recent guidance of earnings of 68-73 cents per share.
Including one-time items, O-I Glass reported EPS of 32 cents for the quarter, compared with EPS of $1.45 in the prior-year quarter.
Operational Update
Revenues were $1,743 billion for the quarter under review, up 3% from the year-ago quarter’s level mainly due to higher selling prices and favorable foreign currency translation. The top line missed the Zacks Consensus Estimate of $1, 744 million. Sales volume (in tons) declined 15% in the quarter due to lower consumer spending and inventory destocking across the value chain.
The cost of sales was up 0.8% year over year to $1,379 million. Gross profit increased 12% year over year to $364 million. The gross margin was 20.9% for the quarter under review compared with 19.2% in the prior-year quarter. Selling and administrative expenses were up 4.7% year over year to $134 million.
Adjusted segment operating profit amounted to $301 million for the reported quarter, up 13% from the prior-year quarter’s $266 million.
Segment Performances
Net sales in the Americas segment dipped 4% year over year to $948 million for the third quarter. Operating profit was down 11% year over year to $116 million.
Gains from favorable net price and margin expansion initiatives were offset by a 16% drop in volumes. Also, temporary production curtailment undertaken by the company to balance supply with lower demand led to higher operating costs in the quarter.
Net sales in the Europe segment were $766 million for the reported quarter, up 12.6% year over year. The segment’s operating profit surged 36% year over year to $185 million, aided by favorable net price, solid operating performance and gains from margin expansion initiatives, However, the segment witnessed a 16.6% decline in sales volume.
Financial Update
O-I Glass had cash and cash equivalents of $792 million as of Sep 30, 2023, down from $773 million at 2022 end. The company generated $339 million in cash from operating activities in the quarter under review against the prior-year quarter’s outflow of $344 million.
Its long-term debt was $4.75 billion as of Sep 30, 2023, up from $4.37 billion as of Dec 31, 2022.
Outlook
O-I Glass now expects adjusted earnings to be around $3.00, lower than the prior-stated range of earnings of $3.10 to $3.25 per share per share. Compared with the adjusted EPS of $2.30 in 2022, the guidance indicates year-over-year growth of 30%.
Sales volume growth (in tons) is projected to be down double digits compared with the earlier expectations of a decline in mid-single digits to high-single digits. OI expects free cash flow in 2023 to be in the range of $100-$150 million, lower than the previously stated range of $175 million. Adjusted free cash flow is expected to be in the range of $400 million to $450 million compared with the previous target of $475 million.
For the fourth quarter of 2023, O-I Glass expects adjusted earnings at around 3 cents per share. Compared with earnings per share of 38 cents in the fourth quarter of 2022, the company’s expectation indicates a year-over-year slump of 92%. Volumes in the fourth quarter are expected to decline in the double digits.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -91.05% due to these changes.
VGM Scores
At this time, O-I Glass has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise O-I Glass has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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O-I Glass (OI) Up 0.8% 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 0.8% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
O-I Glass Q3 Earnings Beat Estimates, 2023 View Revised
O-I Glass reported third-quarter 2023 adjusted earnings per share (EPS) of 80 cents, which beat the Zacks Consensus Estimate of earnings of 69 cents per share. On a year-over-year basis, earnings increased 27% reflecting strong net price realization, solid operating performance and benefits from OI’s ongoing margin expansion initiatives despite lower volumes. The bottom line was also higher than the company’s most recent guidance of earnings of 68-73 cents per share.
Including one-time items, O-I Glass reported EPS of 32 cents for the quarter, compared with EPS of $1.45 in the prior-year quarter.
Operational Update
Revenues were $1,743 billion for the quarter under review, up 3% from the year-ago quarter’s level mainly due to higher selling prices and favorable foreign currency translation. The top line missed the Zacks Consensus Estimate of $1, 744 million. Sales volume (in tons) declined 15% in the quarter due to lower consumer spending and inventory destocking across the value chain.
The cost of sales was up 0.8% year over year to $1,379 million. Gross profit increased 12% year over year to $364 million. The gross margin was 20.9% for the quarter under review compared with 19.2% in the prior-year quarter. Selling and administrative expenses were up 4.7% year over year to $134 million.
Adjusted segment operating profit amounted to $301 million for the reported quarter, up 13% from the prior-year quarter’s $266 million.
Segment Performances
Net sales in the Americas segment dipped 4% year over year to $948 million for the third quarter. Operating profit was down 11% year over year to $116 million.
Gains from favorable net price and margin expansion initiatives were offset by a 16% drop in volumes. Also, temporary production curtailment undertaken by the company to balance supply with lower demand led to higher operating costs in the quarter.
Net sales in the Europe segment were $766 million for the reported quarter, up 12.6% year over year. The segment’s operating profit surged 36% year over year to $185 million, aided by favorable net price, solid operating performance and gains from margin expansion initiatives, However, the segment witnessed a 16.6% decline in sales volume.
Financial Update
O-I Glass had cash and cash equivalents of $792 million as of Sep 30, 2023, down from $773 million at 2022 end. The company generated $339 million in cash from operating activities in the quarter under review against the prior-year quarter’s outflow of $344 million.
Its long-term debt was $4.75 billion as of Sep 30, 2023, up from $4.37 billion as of Dec 31, 2022.
Outlook
O-I Glass now expects adjusted earnings to be around $3.00, lower than the prior-stated range of earnings of $3.10 to $3.25 per share per share. Compared with the adjusted EPS of $2.30 in 2022, the guidance indicates year-over-year growth of 30%.
Sales volume growth (in tons) is projected to be down double digits compared with the earlier expectations of a decline in mid-single digits to high-single digits. OI expects free cash flow in 2023 to be in the range of $100-$150 million, lower than the previously stated range of $175 million. Adjusted free cash flow is expected to be in the range of $400 million to $450 million compared with the previous target of $475 million.
For the fourth quarter of 2023, O-I Glass expects adjusted earnings at around 3 cents per share. Compared with earnings per share of 38 cents in the fourth quarter of 2022, the company’s expectation indicates a year-over-year slump of 92%. Volumes in the fourth quarter are expected to decline in the double digits.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -91.05% due to these changes.
VGM Scores
At this time, O-I Glass has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise O-I Glass has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.