In This Article:
O-I Glass, Inc. (NYSE:OI) shareholders should be happy to see the share price up 11% in the last month. But that doesn't change the reality of under-performance over the last twelve months. In fact the stock is down 30% in the last year, well below the market return.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
See our latest analysis for O-I Glass
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Unhappily, O-I Glass had to report a 3.0% decline in EPS over the last year. Readers should not this outcome was influenced by the impact of extraordinary items on EPS. And indeed the company lost money over the last twelve months. This reduction in EPS is not as bad as the 30% share price fall. This suggests the EPS fall has made some shareholders more nervous about the business.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on O-I Glass' earnings, revenue and cash flow.
A Different Perspective
While the broader market gained around 24% in the last year, O-I Glass shareholders lost 30%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 1.2% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 1 warning sign for O-I Glass that you should be aware of.
O-I Glass is not the only stock that insiders are buying. For those who like to find lesser know companies this free list of growing companies with recent insider purchasing, could be just the ticket.