After reading Owens-Illinois Inc’s (NYSE:OI) latest earnings update (31 December 2017), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether OI has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. View our latest analysis for Owens-Illinois

Was OI weak performance lately part of a long-term decline?

I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method allows me to assess different stocks in a uniform manner using the latest information. For Owens-Illinois, its most recent bottom-line (trailing twelve month) is US$183.00M, which, in comparison to the prior year’s level, has plunged by -15.28%. Given that these values may be fairly nearsighted, I have determined an annualized five-year value for Owens-Illinois’s net income, which stands at US$96.75M This suggests that although earnings growth was negative from last year, over the long run, Owens-Illinois’s earnings have been rising on average.

How has it been able to do this? Let’s see whether it is solely attributable to industry tailwinds, or if Owens-Illinois has experienced some company-specific growth. Over the last couple of years, Owens-Illinois expanded bottom-line, while its top-line declined, by successfully controlling its costs. This has led to to a margin expansion and profitability over time. Viewing growth from a sector-level, the US packaging industry has been growing its average earnings by double-digit 10.93% in the prior year, and a more muted 5.01% over the past five. This shows that any uplift the industry is enjoying, Owens-Illinois has not been able to realize the gains unlike its average peer.

What does this mean?

Though Owens-Illinois’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. You should continue to research Owens-Illinois to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.