O-I Glass, Inc. /DE/ (OI) stock intrinsic value fair value estimate & owner earnings analysis

O-I Glass is the world's largest maker of glass bottles and jars. It sells to beer, wine, spirits, food and soft-drink brands from several dozen plants across the Americas and Europe. Glass is heavy and costly to ship, so each plant mainly serves customers within a few hundred miles. That gives O-I a strong local position, but it is also a capital-heavy business: furnaces must be rebuilt every 10 to 15 years, and energy is a large share of cost. Earnings level. We measure the cash the business produces before paying its lenders: operating cash flow, adjusted to strip out working-capital swings, less stock compensation and the capital spending needed to keep the plants running, plus cash interest. In 2016 to 2021 this ran fairly steadily between $520 million and $730 million a year. Before 2022 the company also paid $105 to $151 million a year in asbestos claims. We add those payments back, along with the one-time $621 million used to fund the asbestos trust in 2022, because that liability is now permanently settled and the business no longer carries it. Since 2022 the figure has been lower: $378 million in 2022, $554 million in 2023, $327 million in 2024 and $451 million in 2025. Capital spending peaked at $617 to $688 million in 2023 and 2024 on expansion projects and the MAGMA furnace technology. MAGMA was halted in 2025 and spending fell back to $432 million. Sales volumes have fallen for three years: revenue went from $7.1 billion in 2023 to $6.4 billion in 2025 and was down again in the first half of 2026. In the first half of 2026 operating cash flow was negative $200 million, and the company booked an $873 million non-cash goodwill write-down. We use the 2022 to 2025 years as the earnings level that describes the business today, a median of roughly $420 million a year before interest, against about $5.0 billion of borrowings. What the business owes. At June 30, 2026, borrowings were about $5.05 billion and cash was $339 million. We treat roughly $150 million of that cash as needed to run the business, and we count the outside owners' share of partly owned subsidiaries (book value $151 million) at about $240 million, based on their share of earnings. That puts the claim ahead of the common shares at about $5.1 billion. Debt maturities are $693 million in 2027, $781 million in 2028, $657 million in 2029 and $1.09 billion in 2030. The 2027 and 2028 maturities fall right when cash flow is weakest, so refinancing on reasonable terms is the key question in every case. Base case. Year one is set at about $380 million of pre-interest cash. That is below 2025's $451 million because operating cash in the first half of 2026 ran $184 million behind the first half of 2025, and European volumes are still falling. Over 2027 and 2028 cash rises to about $480 million as the cost program called Fit to Win carries through. That program delivered about $240 million of measured savings in 2025, and the restructuring cash that funded it, $128 million in 2025, rolls off. We credit only savings already shown in the results, not the company's target of $750 million cumulative by 2027. After that, earnings fade about 1% a year. We assume no volume growth, because shipments have fallen three years running and nothing in the filings shows that reversing. On that path the business is worth about $6.9 billion. After about $5.1 billion owed, that leaves about $1.8 billion, or roughly $11.80 per share. Bear case. Glass container volume falls in downturns. In 2020 O-I's revenue dropped 9%. In the 2024 volume slump, pre-interest cash fell about 40%, from $554 million to $327 million. The bear case starts from today's weaker base, at about $330 million, and adds one more downturn of that size in 2027 and 2028, with cash falling to about $250 million. That is about the size of a year's interest bill, so it overlaps with the 2027 to 2028 refinancing. The case assumes the debt is rolled over at higher cost, recovery to only about $320 million, and a slow fade after that as European capacity keeps shrinking. On that path the business is worth about $4.0 billion against $5.1 billion owed. The company would owe about $1.1 billion more than it is worth, around negative $7 per share, which in practice means shareholders could be wiped out or heavily diluted in a restructuring. Bull case. Fit to Win savings show up fully at the planned pace, the closed capacity lets prices hold, and Americas volumes stabilize. Pre-interest cash climbs to about $600 million by 2029, close to the 2016 to 2021 average, and stays there. We credit nothing for new markets or volume growth. The business would be worth about $9.7 billion. After debt, that is about $4.6 billion, or roughly $30 per share. Compared with our previous analysis. The previous figures were built on a different basis and are not directly comparable. In the business itself, things have gotten worse: operating cash flow was negative in the first half of 2026, goodwill was written down by $873 million, and revenue is still falling. On the other side, the halt of MAGMA and the measured cost savings are real. Most of the base value now depends on those savings holding. Margin-of-safety price. We are not very sure of the earnings level. The pre-interest cash flow of the last four years ranges from $327 million to $554 million, and 2026 is running below all of them. The worst plausible outcome is a recession arriving while the company refinances about $1.5 billion of debt in 2027 and 2028. That outcome is not remote. Glass plants are hard assets that do hold value, but $5 billion of debt against roughly $400 million of pre-interest cash leaves almost nothing for the shareholders if things go wrong. If we are wrong about the cost savings sticking, or about volumes leveling off, the shares are worth close to nothing, as the bear case shows. The company pays a small buyback ($40 million a year) and no dividend, so nothing is paid out during the holding period. The margin-of-safety price is set where a successful refinancing plus partial cost delivery would imply roughly four times the price over five or six years. That leaves room for a bad outcome. The margin-of-safety price is $4.50. Things we could not fully reconcile. The filings do not show how much of the 2026 operating-cash shortfall is a timing effect of working capital versus lasting lower profit. We treated most of it as lasting for year one only.