Why Owens-Illinois Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of glass-bottle maker Owens-Illinois (NYS: OI) bubbled higher by as much as 12% earlier today after the company provided an update to its first-quarter earnings results, which are expected to be reported later this month.

So what: Owens-Illinois in a statement this morning said it expects earnings from continued operations to be at least 35% higher than in the year-ago period. Based on the $0.47 the company earned in Q1 2011, this translates into EPS of $0.63-$0.64 versus Wall Street's current consensus estimate of $0.50. The company cited good manufacturing performance, which includes higher prices and lower expenses, as the reason for the guidance boost.

Now what: Today's move is nice considering Owens-Illinois is not a very volatile company, but I still would like to see the company address stagnant growth issues. Cutting expenses usually helps the bottom line for a few quarters, but it's not a long-term strategy. The company offers no dividend and is heavily levered with $4 billion in debt; I'd consider leaving the cap on this bottle.

Craving more input? Start by adding Owens-Illinois to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time thisarticle was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.