Index removals refocus attention on O-I Glass stock

O-I Glass (OI) was recently removed from several Russell growth indices, including the Russell 2000 and Russell 2500, a change that can influence index fund positioning and short term trading flows.

At a share price of US$9.63, O-I Glass has seen short term momentum pick up, with a 7 day share price return of 5.94% and a 30 day gain of 10.06%. However, the share price is still down 36.48% year to date and long term total shareholder returns over three and five years have also been weak. This helps explain why index removals and related trading flows are in sharper focus.

If you are reassessing your exposure after O-I Glass’s index changes, it can be useful to see what else is moving and compare with 20 top founder-led companies

So, with O-I Glass trading at US$9.63 after a weak multi year return profile, yet sitting at a sizable discount to analyst targets and some intrinsic value estimates, is this a reset entry point, or is the market already pricing in future growth?

Most Popular Narrative: 26.6% Undervalued

Compared with O-I Glass’s last close at $9.63, the most followed narrative anchors on a fair value of $13.11, setting a clear valuation gap for investors to assess.

The analysts have a consensus price target of $13.11 for O-I Glass based on their expectations of its future earnings growth, profit margins and other risk factors.

However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $15.0, and the most bearish reporting a price target of just $10.0.

Want to see what sits behind that $13.11 figure for O-I Glass? The narrative focuses on expectations for an earnings recovery, firmer margins, and a future profit multiple that is seen as far below what many peers trade on. Investors may wish to consider which specific growth and profitability assumptions would need to hold for this discount rate to be consistent with that valuation.

Result: Fair Value of $13.11 (UNDERVALUED)

However, O-I Glass still faces pressure from weak demand in key European markets and long term competition from alternative packaging materials that could limit the upside in this narrative.

Next Steps

Given the mixed sentiment around O-I Glass, you may want to move quickly and examine both sides of the story for yourself by starting with 4 key rewards and 1 important warning sign

Looking for more investment ideas beyond O-I Glass?

If O-I Glass has you rethinking your portfolio, do not stop there. Use focused stock lists to quickly surface other opportunities that match your style.

• Target higher potential returns by reviewing 22 elite penny stocks with strong financials that already meet strict financial quality filters.
• Strengthen your core holdings with the 43 high quality undervalued stocks built around strong cash flows and balance sheets at conservative prices.
• Prioritize resilience and capital protection by scanning the 74 resilient stocks with low risk scores designed to highlight companies with lower overall risk scores.

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.