Rating Change #8
Owens-Illinois Inc (OI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally weak debt management, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Containers & Packaging industry. The net income has significantly decreased by 87.1% when compared to the same quarter one year ago, falling from -$412.00 million to -$771.00 million.
- The debt-to-equity ratio is very high at 4.81 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. To add to this, OI has a quick ratio of 0.69, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Containers & Packaging industry and the overall market, OWENS-ILLINOIS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for OWENS-ILLINOIS INC is rather low; currently it is at 22.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -42.40% is significantly below that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.25%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 823.52% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
Owens-Illinois, Inc., through its subsidiaries, engages in the manufacture and sale of glass containers primarily in Europe, North America, South America, and the Asia Pacific. The company has a P/E ratio of 21.2, above the S&P 500 P/E ratio of 17.7. Owens-Illinois has a market cap of $3.8 billion and is part of the consumer goods sector and consumer non-durables industry. Shares are up 19.8% year to date as of the close of trading on Thursday.You can view the full Owens-Illinois Ratings Report or get investment ideas from our investment research center.