(By Salman - iStockAnalyst Writer)Owens-Illinois (NYSE: OI)

Owens-Illinois, Inc. manufactures and sells glass containers primarily in Europe, North America, the Asia Pacific, and South America. It produces glass containers for beer, ready-to-drink low alcohol refreshers, spirits, wine, food, tea, juice, and pharmaceuticals. The company also produces glass containers for soft drinks and other non-alcoholic beverages.

Late in April, the company posted sharp decline in quarterly profits. First-quarter net earnings totaled $45.1 million or 27 cents a share, compared to $178.1 million or $1.04 a share in the corresponding quarter last year. On an adjusted basis, earnings declined to $92.8 million or 55 cents a share, from $183.7 million, or $1.08 a share, in the similar period last year. Sales dropped to 1.52 billion from $1.96 billion. Analysts on average were looking for earnings of 36 cents a share on revenue of $1.66 billion. Analysts' estimates typically exclude special items. The results were primarily impacted by a drop in shipments. However, despite a steep fall in earnings, the quarter turned out to be the second best first quarter since the company's IPO in 1991.First quarter is traditionally a weak quarter for the company.

The company acted swiftly to balance its production with sharply lower demand to prevent building excess inventory and to preserve profit margins over the long term. At the same time, it successfully raised its average selling prices, which more than offset inflationary cost increases.

The company anticipates challenging market conditions to persist over the next several quarters resulting in lower year-over-year demand and continued temporary production curtailments. However, it expects shipments to improve sequentially in the second quarter due to seasonally stronger demand and as inventory de-stocking pressures subside. On an overall basis, the company expects second quarter 2009 adjusted net earnings to decline on a year-over-year basis, but anticipates an improvement from first quarter 2009 results. The company also expects higher average prices on a year-over-year basis. Moreover, the firm also has several long-term contracts up for renewal later in 2009.

Looking at the balance sheet, the company currently has $378.20 million in cash and cash equivalents and $3.33 billion in debt. The stock currently trades at a forward P/E (fye 31-Dec-10) of 8.07 and PEG ratio (5 yr expected) of 1.28. Of the nine Wall Street analysts who follow the stock, five rate it a Strong Buy while two tag it a Moderate Buy.