Back to top

Owens-Illinois Slips to 52-Week Low: What's Taking it Down?

Read MoreHide Full Article

Shares of Owens-Illinois, Inc. (OI - Free Report) hit a 52-week low of $16.76 on Jun 22, closing a notch higher at $16.86.

The stock has depreciated 20% so far this year, performing even worse than the industry’s 19% decline. This underlines the impact of decline in beer consumption in the domestic market.

Let’s delve deeper to analyze the factors affecting this Zacks Rank #4 (Sell) company’s performance.

What’s Dragging the Stock Down?

Notably, Owens-Illinois is facing troubles from falling consumer demand, increasing competition and tougher market access. Intense competition from other well established glass container manufacturers, such as Compagnie de Saint-Gobain, Anchor Glass Container Corp. and Ardagh Group S.A. (ARD - Free Report) , also remains another major headwind.

In the past month, Owens-Illinois has finalized plans to cease production at its Atlanta, GA, plant mainly due to continued decline of beer consumption in the domestic market. This facility is likely to be shut down on or after Jul 18, 2018.

Furthermore, competition from manufacturers of alternative forms of packaging, such as aluminum cans and plastic containers, is a key concern. Advantages in price, quality, and functional attributes of these alternative containers may lead to customers considering a change of suppliers or the form of packaging, which could affect Owens-Illinois.

For second-quarter 2018, Owens-Illinois expects adjusted earnings of nearly 75 cents per share, flat year over year. Further, interest in taxes will be higher than the prior year. Improvement in ongoing business operations will be offset by investments in assets and new technology developments compared with the prior-year quarter.

In addition, the company’s interest expense is likely to flare up due to higher variable rates in the United States as well as the strengthening euro. Despite Owens-Illinois’ deleveraging and refinancing actions over the past 12 months, its debt-to-capitalization ratio remains high at 84%, which is a concerning factor.

Furthermore, the maker of glass container products has an unimpressive VGM Score of C. Also, the Zacks Consensus Estimate for 2018 and 2019 earnings has been revised 0.7% downward, over the past 30 days. This reflects analysts’ bearish sentiments, which is likely to keep the stock under pressure in the coming quarters.

Owens-Illinois, Inc. Price and Consensus


Owens-Illinois, Inc. Price and Consensus | Owens-Illinois, Inc. Quote

Still Interested in This Space? Check These Stocks

Some better-ranked stocks in the same sector include Axon Enterprise, Inc (AAXN - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Axon Enterprise has a long-term earnings growth rate of 25%. Its shares have appreciated 150%, year to date.

Industrial Technologies has a long-term earnings growth rate of 12%. The company’s shares have been up 11% so far this year.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

More from Zacks Analyst Blog

You May Like

Published in