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Owens-Illinois (OI) Misses Earnings & Sales Estimates in Q4

Zacks Equity Research

Owens-Illinois, Inc. OI reported fourth-quarter adjusted earnings of 61 cents per share, up 7% year over year. The figure was in line with management’s guidance. However, earnings missed the Zacks Consensus Estimate of 63 cents.

Including one-time items, the company reported loss from continuing operations of 78 cents per share in the reported quarter compared with a loss of 81 cents in the prior-year quarter.

Operational Update
 
Net sales declined 4.5% year over year to $1.64 billion, mainly due to a drop in shipment in the fourth quarter. Sales missed the Zacks Consensus Estimate of $1.68 billion.
 
Cost of sales declined 4% year over year to $1,341 million. Gross profit declined 8.1% year over year to $294 million. Selling and administrative expenses contracted 5% year over year to $116 million. Segment operating profit dropped 0.5% year over year to $211 million.

Owens-Illinois, Inc. Price, Consensus and EPS Surprise

 

Owens-Illinois, Inc. Price, Consensus and EPS Surprise | Owens-Illinois, Inc. Quote

Segmental Performance

Net sales at the Americas segment declined 8% year over year to $861 million during the fourth quarter. Operating profit declined 18% year over year to $127 million.

Net sales at the Europe segment were $560 million, down 0.5% year over year in the quarter. Segment operating profit increased 30% year over year to $56 million driven by an increase in glass container shipments.

Net sales in the Asia Pacific region decreased 7% year over year to $184 million in the reported quarter. Operating profit doubled to $28 million from $14 million a year ago on lower operational costs.

Financial Update
 
Owens-Illinois had cash and cash equivalents of $512 million at the end of the 2018, up from $492 million at the end of 2017. The company generated $793 million of cash flow from operating activities during the 12-month period ended Dec 31, 2018, compared with $724 million in the comparable period last year. The company’s long-term debt declined to $5.2 billion as of Dec 31, 2018, compared with $5.1 billion as of Dec 31, 2017.

2018 Results

Owens-Illinois reported adjusted earnings per share of $2.72 in 2018, up 2.6% from $2.65 in the prior year. Earnings missed the Zacks Consensus Estimate of $2.74.
 
Sales were up 0.1% year over year to $6.88 billion from $6.87 billion in 2017. The top line missed the Zacks Consensus Estimate of $6.92 billion.

2019 Outlook

The company expects adjusted earnings to be around $3.00 a share. Cash provided by continuing operations is expected at $740 million and adjusted free cash flow is estimated at around $400 million.

Share Price Performance

Owens-Illinois’ stock has lost around 11.8% in a year’s time, compared with the industry’s decline of 13.1%.

 


 
Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the Industrial Products sector are Axon Enterprise, Inc AAXN, Alarm.com Holdings, Inc. ALRM and EnerSys ENS. While Axon and Alarm.com currently flaunt a Zacks Rank #1 (Strong Buy), EnerSys carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Axon has an expected earnings growth rate of 14.5% for 2019. The company’s shares have rallied 102.3% in the past year.

Alarm.com has an expected earnings growth rate of 7.8% for 2019.  The stock has climbed 65.3% in a year’s time.

EnerSys has an expected earnings growth rate of 9.5% for 2019. Its shares have gained 33.3% in the past year.

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