Why Owens-Illinois (OI) Stock Is Down Today

NEW YORK (TheStreet) -- Owens-Illinois (OI) was falling 7.1% to $29.12 Wednesday after announcing that it expects lower earnings for the third quarter.

The packaging and containers company said that it now expects its third quarter earnings to be about 5% lower than the third quarter in 2013. A 5% decrease would mean earnings of about 75 cents a share for the quarter, below the 88 cents a share analysts surveyed by FactSet estimate.

Owen-Illinois expects the lower earnings due to lower sales during the quarter. Sales volume in North American fell by low single-digits and Asia Pacific sales volume saw a double-digit decline compared to the year-ago quarter.

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TheStreet Ratings team rates OWENS-ILLINOIS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate OWENS-ILLINOIS INC (OI) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 0.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • OWENS-ILLINOIS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, OWENS-ILLINOIS INC increased its bottom line by earning $1.20 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($2.90 versus $1.20).
  • Net operating cash flow has increased to $170.00 million or 11.11% when compared to the same quarter last year. Despite an increase in cash flow, OWENS-ILLINOIS INC's average is still marginally south of the industry average growth rate of 18.03%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The gross profit margin for OWENS-ILLINOIS INC is currently lower than what is desirable, coming in at 26.49%. Regardless of OI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, OI's net profit margin of 6.34% compares favorably to the industry average.
  • You can view the full analysis from the report here: OI Ratings Report

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