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A Look at the 3Q16 Performance of Owens-Illinois

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Price movement

Owens-Illinois (OI) has a market cap of $3.1 billion. It rose 10.8% to close at $18.83 per share on October 26, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 7.1%, 5.1%, and 8.1%, respectively, on the same day.

OI is trading 6.8% above its 20-day moving average, 5.6% above its 50-day moving average, and 10.4% above its 200-day moving average.

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Related ETF and peers

The iShares Russell 3000 (IWV) invests 0.01% of its holdings in Owens-Illinois. The ETF tracks a cap-weighted index that measures the investable US equities market, covering the entire market-cap spectrum, including micro-caps. The YTD price movement of IWV was 6.4% on October 26.

The market caps of Owens-Illinois’s competitors are as follows:

  • Molson Coors Brewing (TAP): $22.8 billion
  • Crown Holdings (CCK): $7.6 billion
  • AptarGroup (ATR): $4.7 billion

Performance of Owens-Illinois in 3Q16

Owens-Illinois reported 3Q16 net sales of $1.7 billion, a rise of 6.2% compared to net sales of $1.6 billion in 3Q15. The rise was due to the investment in nonorganic growth and an increase in shipments in Mexico and the United States for its acquired business.

Sales for its North America, Latin America, and Asia Pacific segments rose 11.2%, 37.7%, and 4.9%, respectively. Sales from Europe fell 3.1% in 3Q16 compared to 3Q15. The company’s gross profit margin rose 200 bps (basis points) in 3Q16 compared to the prior year’s period.

The company’s net income and EPS (earnings per share) rose to $108.0 million and $0.66, respectively, in 3Q16 compared to $17.0 million and $0.10, respectively, in 3Q15. It reported adjusted EPS of $0.68 in 3Q16, a rise of 19.3% compared to 3Q15.

OI’s cash and cash equivalents fell 26.3%, and its inventories rose 5.0% in 3Q16 compared to 4Q15. Its current ratio rose to 1.2x, and its long-term debt-to-equity ratio fell to 10.4x in 3Q16 compared to 1.1x and 19.2x, respectively, in 4Q15.

Projections

The company has made the following projections for fiscal 2016:

  • adjusted EPS of $2.27–$2.32, reflecting an uncertainty in macroeconomic conditions and currency rates
  • cash from operating activities of ~$750 million
  • free cash flow of ~$300 million

In the next and final part of this series, we’ll look at Fortune Brands Home & Security (FBHS).

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