Owens-Illinois Inc (NYSE:OI), a packaging company based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $25.68 and falling to the lows of $22.28. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Owens-Illinois’s current trading price of $22.28 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Owens-Illinois’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Owens-Illinois
What’s the opportunity in Owens-Illinois?
Owens-Illinois appears to be overvalued by 54% at the moment, based on my discounted cash flow valuation. The stock is currently priced at $22.28 on the market compared to my intrinsic value of $14.5. This means that the opportunity to buy Owens-Illinois at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Owens-Illinois’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Owens-Illinois?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Owens-Illinois’s earnings over the next few years are expected to increase by 86.27%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Owens-Illinois’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe Owens-Illinois should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on Owens-Illinois for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for Owens-Illinois, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Owens-Illinois. You can find everything you need to know about Owens-Illinois in the latest infographic research report. If you are no longer interested in Owens-Illinois, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.