Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Owens-Illinois (NYSE: OI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.
- OWENS-ILLINOIS INC has improved earnings per share by 43.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, OWENS-ILLINOIS INC turned its bottom line around by earning $1.10 versus -$3.07 in the prior year. This year, the market expects an improvement in earnings ($2.75 versus $1.10).
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 2.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Containers & Packaging industry and the overall market on the basis of return on equity, OWENS-ILLINOIS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The gross profit margin for OWENS-ILLINOIS INC is rather low; currently it is at 24.44%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 7.28% is above that of the industry average.
- 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. To add to this, OI has a quick ratio of 0.67, this demonstrates the lack of ability of the company to cover short-term liquidity needs.