Why Owens-Illinois (OI) Stock Is Declining Today

NEW YORK (TheStreet) -- Shares of Owens-Illinois Inc. (OI) are down by 1.71% to $28.09 at the start of trading on Thursday, as the stock continues to decline afire the announcement the company made on Wednesday, stating earnings per share for the 2014 third quarter are expected to be lower by at least 5%.

A 5% decline would see the glass container manufacturer's earnings reach about 75 cents per share.

Analysts polled by FactSet had forecast earnings of 88 cents per share for the 2014 third quarter.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Additionally, Robert Baird lowered its rating on Owens-Illinois to "neutral" from "outperform," as the firm believes the company is facing continued growth challenges.

Robert Baird cut its price target on the stock to $32 from $40.

Separately, 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
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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