Why O-I Glass, Inc. (NYSE:OI) Could Be Worth Watching

O-I Glass, Inc. (NYSE:OI), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$23.36 at one point, and dropping to the lows of US$18.02. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether O-I Glass' current trading price of US$18.37 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at O-I Glass’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for O-I Glass

What Is O-I Glass Worth?

Great news for investors – O-I Glass is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 5.09x is currently well-below the industry average of 13.05x, meaning that it is trading at a cheaper price relative to its peers. Although, there may be another chance to buy again in the future. This is because O-I Glass’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will O-I Glass generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -5.0% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for O-I Glass. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although OI is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to OI, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on OI for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about O-I Glass as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for O-I Glass you should know about.

If you are no longer interested in O-I Glass, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.