Owens-Illinois, Inc. – Value Analysis (NYSE:OI) : December 7, 2017

Capitalcube gives Owens-Illinois, Inc. a score of 38.

Our analysis is based on comparing Owens-Illinois, Inc. with the following peers – Aptargroup, Inc., Amcor Ltd Sponsored ADR, Ball Corporation, Crown Holdings, Inc., Silgan Holdings Inc., Cristalerias De Chile S.A., PepsiCo, Inc. and Molson Coors Brewing Company Class B (ATR-US, AMCRY-US, BLL-US, CCK-US, SLGN-US, CRISTALES-CL, PEP-US and TAP-US).

Investment Outlook

Owens-Illinois, Inc. has a fundamental score of 38 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative outperformance over the last year has faded more recently.
  • It’s current Price/Book of 4.17 is about median in its peer group.
  • We classify OI-US as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • OI-US has relatively low profit margins and median asset efficiency.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • OI-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • While OI-US‘s revenues growth in recent years has been around the peer median, the stock’s below peer median P/E ratio suggests that the market likely sees the company’s long-term growth prospects to be fading.
  • The company’s capital investment program and to-date returns suggest that the company is likely making big bets on the future.
  • OI-US seems to be constrained by the current level of debt.

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Leverage & Liquidity

OI-US is debt-constrained.

  • With debt at a relatively high 68.56% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 35.86%), and interest coverage level of 2.20x, OI-US seems debt-constrained.
  • All 8 peers for the company have an outstanding debt balance.

OI-US has maintained its relatively high leverage profile from the recent year-end.

  • OI-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 3.40x in 2013.
  • Compared to 2016, interest coverage has remained relatively stable for both the company (2.20x) and the peer median (5.07x).
  • Interest coverage fell 0.77 points relative to peers. It is also below the 2.50x coverage benchmark unlike the peer median.
  • OI-US‘s debt-EV is greater than (but within one standard deviation of) its five-year average debt-EV of 55.24%.
  • Like the interest coverage trend, debt-EV has remained relatively stable for both the company (68.56%) and the peer median (35.86%).

Access the detailed analysis for Owens-Illinois, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Aptargroup, Inc. 18.77 2.75 9.31 34.27
Amcor Ltd Sponsored ADR N/A 0.82 5.07 21.34
Ball Corporation N/A 1.04 3.69 10.02
Crown Holdings, Inc. 39.66 1.04 4.5 17.47
Silgan Holdings Inc. 35.86 1.26 3.55 12.58
Cristalerias De Chile S.A. 20.55 2.96 6.56 29.11
PepsiCo, Inc. 21.22 1.35 6.38 25.13
Molson Coors Brewing Company Class B 42.27 0.69 5.16 13.51
Owens-Illinois, Inc. 68.56 1.23 2.2 13.13
Peer Median 35.86 1.23 5.07 17.47
Best In Class 18.77 2.96 9.31 34.27

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Company Profile

Owens-Illinois, Inc. engages in the manufacture and supply of glass containers for beverages. It provides glass packaging to alcoholic beverages, soft drinks, juices, and pharmaceuticals. The company was founded by Michael J. Owens in 1903 and is headquartered in Perrysburg, OH.


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