Owens-Illinois (OI) Q4 Earnings: What's in Store this Time?

Manufacturer of glass containers, Owens-Illinois, Inc.OI is scheduled to report fourth-quarter 2016 results on Feb 1, after the closing bell. In the last reported quarter, the company reported a year-over-year increase both in earnings and sales. While earnings surpassed the Zacks Consensus Estimate, revenues fell short. Let's see how things are shaping up prior to this announcement.

Earnings Whispers

Our proven model does not conclusively show that Owens-Illinois is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here, as you will see below.

Zacks ESP: Owens-Illinois' Earnings ESP is +0.00% as the Most Accurate estimate of 47 cents is in line with the Zacks Consensus Estimate. A positive Earnings ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: Though Owens-Illinois' Zacks Rank #3 increases the predictive power of the ESP, its 0.00% ESP makes surprise prediction difficult. Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Surprise History

In the last reported quarter, the company posted a positive earnings surprise of 3.03%. Owens-Illinois has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, with an average earnings beat of 6.97%.

Owens-Illinois, Inc. Price and EPS Surprise

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

Price Performance

Owens-Illinois has underperformed the Zacks categorized Glass Products industry in the last one year. The stock has dipped 0.2% while the industry gained 12.9% in abovementioned the time frame.

Factors At Play

Owen-Illinois' acquisition of Vitro's food and beverage business will boost both its top and bottom-line results in the quarter. However, results will be affected by uncertainty in macroeconomic conditions and currency rates, among other factors. Results in Brazil will continue to bear the impact of political uncertainty in the region. In Europe, heightened competitive activity has been pushing down selling prices.

Results in North America will remain strong but in the Asia Pacific market, margins are likely to be impacted as the company is making substantial investments in enhancing the flexibility and reliability of its production assets in the region. The company anticipates the Brexit to have a negative impact to its European business. Owens-Illinois is projecting adjusted earnings per share for the fourth quarter in the range of 46-51 cents. The midpoint of the guidance reflects a 21% year-over-year growth.

Owens-Illinois projects earnings per share to lie within $2.27 and $2.32 per share for 2016. The midpoint of the guidance implies 15% year-over-year growth. Segment operating profit margin expansion is projected at more than 100 basis points (bps). Overall volume growth is targeted at approximately 1% for full year. In mature markets, volume growth expected to be more than 1% while lower sales is anticipated in emerging markets due to macro weakness and investments in assets. The company is targeting 1% volume growth for 2016 and a 100 bps expansion in segment margins. For the year, organic volume growth target include: Europe (up 1%), North America (up 1%), Latin America (down 3%) and Asia Pacific (down 2%).

Stocks to Consider

Here are some stocks in the industrial products sector that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Cintas Corporation CTAS has an Earnings ESP of +0.94% and carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

AGCO Corporation AGCO has an Earnings ESP of +5.63% and a Zacks Rank #3.

Deere & Company DE also carries a Zacks Rank #3 and has an Earnings ESP of +13.73%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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