Two analysts cut their earnings estimates on container glass manufacturer Owens-Illinois Inc. on 17 September 2008, but said they still think the share is trading very cheaply, with its recent sell-off creating a buying opportunity for investors. Amid a broad market fall that saw the Dow Jones industrial average plunge nearly 450 points, OI shares dropped US$3.42, or 11.7%, to US$25.94. The stock earlier hit a new low for the year to date of US$ 25.79. The price is far from the year-high of US$ 60.60 in April 2008. On 15 September 2008, the stock ended 7% lower as KeyBanc Capital Markets analyst Christopher Manuel warned in a client note that higher energy prices in the 1H 2008 will hurt the company's second-half results, as will a stronger US dollar. He also said volumes are likely to remain down in the 2H 2008. On 16 September 2008, shares fell a further 17% after O-I cut its estimate for 2008 free cash flow to between USD 332 million and USD 400 million, from an earlier forecast of USD 500 million. Investors watch free cash flow to see how much cash, and therefore profit, a company can generate after allocating the money required to maintain or expand assets. Based on the company's revised outlook, Deutsche Bank-North America analyst Mark Wilde on 17 September 2008 cut his full-year profit estimate to USD 4.05 from USD 4.50, and Goldman Sachs analyst Richard Skidmore cut his estimate to USD 4 from USD 4.40. Analysts polled by Thomson Reuters expect, on average, USD 4.10 in profit for the full year. However, both analysts maintained their "Buy" rating on the stock, saying Owens-Illinois shares are "extremely inexpensive" and calling the past week's sell-off "overdone". Goldman Sachs' Mr. Skidmore said strong glass prices, abating inflation and the company's newly announced plans for a USD 350 million share buyback will help boost profitability.
