Rating Change #3
Owens-Illinois Inc (OI) has been upgraded by TheStreet Ratings from sell to hold. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including generally higher debt management risk, disappointing return on equity and poor profit margins.
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Highlights from the ratings report include:
- Net operating cash flow has increased to $223.00 million or 19.89% when compared to the same quarter last year. In addition, OWENS-ILLINOIS INC has also modestly surpassed the industry average cash flow growth rate of 18.91%.
- OI, with its decline in revenue, slightly underperformed the industry average of 1.2%. Since the same quarter one year prior, revenues slightly dropped by 6.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- OWENS-ILLINOIS INC's earnings per share declined by 23.6% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, OWENS-ILLINOIS INC swung to a loss, reporting -$3.07 versus $1.53 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus -$3.07).
- The debt-to-equity ratio is very high at 3.03 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, OI maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.
- 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.
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