O-I Glass, Inc. OI raised its earnings expectations for third-quarter fiscal 2022 and for the full fiscal. OI now expects adjusted earnings per share (EPS) for the fiscal third quarter to be at the high end of or surpass its earlier guided range of 55-60 cents. OI had reported adjusted earnings per share of 58 cents in the third quarter of fiscal 2021. The upbeat outlook indicates higher net price realization and a solid operating performance.
Management stated that shipment levels so far in the quarter have been in line with its expectations of flat to slight volume growth for the ongoing quarter.
The glass container manufacturer expects to deliver adjusted earnings between $2.10 and $2.25 per share in fiscal 2022. This compares favorably with the adjusted earnings per share of $1.83 reported in fiscal 2021. At its second-quarter fiscal2022 conference call, O-I Glass had provided an earnings guidance of $2.05-$2.20 per share.
OI expects free cash flow in fiscal 2022 to be more than $200 million, up from the prior projection of at least $175 million. Adjusted free cash flow is expected to be at least $400 million.
O-I Glass is well-poised to benefit from the growing consumer preference for glass as the healthy, premium and sustainable packaging option for food and beverage compared to other mediums. OI is taking initiatives as part of its transformation plan for 2022 through 2024. OI expects its margin expansion initiative to generate annual benefits of $50 million between 2022 and 2024.
OI successfully completed its $1.5-billion portfolio optimization program, way ahead of its schedule in 2024. O-I Glass had embarked on this initiative to re-align its business portfolio, improve the return on invested capital and fund organic growth. Proceeds from the portfolio rationalization move will be utilized to fund attractive expansion projects and improve its financial strength.
O-I Glass intends to invest up to $630 million in new capacity expansion over the next three-year period to achieve volume growth and meet demand. Overall, these investments are expected to generate an internal rate of return of 20%, on average.
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Shares of O-I Glass have gained 16.4% over the past six months compared with the industry’s growth of 5.9%.
Zacks Rank & Stocks to Consider
O-I Glass currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Industrial Products sector are RBC Bearings ROLL, W.W. Grainger GWW and Greif GEF. While ROLL and GWW flaunt a Zacks Rank #1 (Strong Buy), GEF carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
RBC Bearings has an expected earnings growth rate of 77% for fiscal 2023. The Zacks Consensus Estimate for the current fiscal-year earnings has moved up 22% in the past 60 days.
RBC Bearings has a trailing four-quarter earnings surprise of 9.4%, on average. ROLL’s shares have increased 28% in the past six months.
Grainger has an estimated earnings growth rate of 41.5% for the current fiscal year. In the past 60 days, the Zacks Consensus Estimate for current fiscal-year earnings has been revised 7% upward.
Grainger pulled off a trailing four-quarter earnings surprise of 7.9%, on average. GEF’s shares have gained 12% in the past six months.
Greif has an estimated earnings growth rate of 43% for the current fiscal year. In the past 60 days, the Zacks Consensus Estimate for current fiscal-year earnings has gone up 5%.
Greif has a trailing four-quarter earnings surprise of 22.4%, on average. GEF’s shares have gained 13% over the past six months.
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