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4 Stocks to Watch From the Promising Glass Products Industry
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The Zacks Glass Products industry is poised to benefit from the rising demand for glass, both as a packaging option and for use in construction. This is backed by its endless recyclability and sustainability benefits. Growing demand for energy-efficient, smart windows or smart glass panels will be a catalyst for the industry, going forward.
O-I Glass (OI - Free Report) , Apogee Enterprises (APOG - Free Report) , View and Crown Electrokinetics (CRKN - Free Report) are likely to gain from solid end-market demand, focus on bringing innovative products and cost-control efforts.
About the Industry
The Zacks Glass Products industry comprises companies that manufacture and sell glass products. One company produces glass containers for packaging beverages, food and pharmaceuticals. Another player in the industry offers coated and high-performance glass used in customized window and wall systems. The same company caters to the construction industry, ranging from commercial and multi-family residential to institutional buildings. It also provides coated glass for picture framing, wall décor and display applications. One company offers smart glass windows using artificial intelligence to adjust and suitably increase access to natural light, while minimizing heat and glare. Another company developed an electrokinetic technology, which can be retrofitted on any glass, enabling buildings to cut energy consumption and save on heating and cooling costs, the need of the hour.
Major Trends Shaping the Future of the Glass Products Industry
Glass Packaging Gaining Popularity: Glass is increasingly becoming the packaging choice for customers, given its endless recyclability without a loss in quality. More than 80% of recycled bottles are used in making new bottles. This also helps negate the need for raw materials. Every ton of recycled glass saves 1,400 pounds of sand, 430 pounds of soda ash and 400 pounds of limestone/dolomite. As consumers are becoming more aware of their environmental footprint, a sharp spike in demand is noticed for refillable bottles, which offer the most sustainable and economical rigid packaging option. Manufacturers are focusing on improving their products by reducing the weight of the bottles for more convenient handling. Also, premium cosmetic and beverage brands are opting for glass to differentiate their products through packaging and ensure quality maintenance. Per Statista, the global market value of glass packaging is expected to surge to $88.3 billion in 2032 from $55.5 billion in 2022.
Demand in the Construction Sector Holds Promise: In recent years, the use of glass gained popularity in construction as a sustainable alternative to traditional building materials, including wood and bricks, owing to its cost-effectiveness, lightweight, immense strength and environmentally friendly factor. Glass increases the influx of natural light in the building, reduces energy consumption, minimizes carbon emissions and enhances the aesthetic appeal of structures. Rising construction activities across the residential, commercial and industrial sectors are likely to fuel the glass products industry’s growth. Increasing investments in the renovation or modernization of the existing infrastructure will also drive the industry’s growth. Various governments are introducing favorable policies and granting incentives to promote green construction to minimize greenhouse emissions and energy consumption, which bode well for the industry. The global construction glass market is expected to be around $52.7 billion in 2023 and grow thereafter, seeing a CAGR of 7%, to reach $190.3 billion by 2027.
Technological Innovation is the Key: Some players revolutionized the industry by bringing smart glass panels or smart windows to the market. These innovative products are designed to enable people to lead healthier and more productive lives by increasing access to daylight and views, while minimizing glare and heat from the sun, and keeping occupants comfortable. These products also help cut down on energy consumption from lighting and HVAC, thus reducing carbon emissions. The Inflation Reduction Act of 2022, already signed into law, will be a game changer for the industry as it includes a 30-50% Investment Tax Credit (ITC) for smart windows.
Pricing Actions, Improving Efficiency to Offset Cost Inflation: The industry is witnessing rising costs for transportation, chemical and fuel, and supply-chain headwinds. Therefore, industry players are increasingly focusing on pricing actions and cost reduction, and resorting to automation in manufacturing to boost productivity and efficiency.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Glass Products industry is a 5-stock group within the broader Industrial Products sector. The industry currently carries a Zacks Industry Rank #14, which places it in the top 6% of the 251 Zacks industries.
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bullish prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a solid earnings outlook for the constituent companies in aggregate.
Before we present a few Glass Products stocks for investors’ consideration, it is worth looking at the industry’s stock-market performance and its valuation picture.
Industry Versus S&P 500 & Sector
The Glass Products industry has outperformed the S&P 500 and the sector over the past year. The stocks in this industry have gained 13% against the Industrial Products sector’s growth of 5.5%. The S&P 500 composite has gained 3% during the said time frame.
One-Year Price Performance
Industry's Current Valuation
Based on the forward 12-month EV/EBITDA ratio, a commonly-used multiple for valuing Glass Products companies, we see that the industry is currently trading at 5.59X compared with the S&P 500’s 19.75X and the Industrial Products sector’s 20.00X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio (F12M)
Enterprise Value/EBITDA (EV/EBITDA) Ratio (F12M)
Over the last five years, the industry has traded as high as 6.53X and as low as 4.33X, the median being 5.98X.
4 Glass Products Stocks to Keep an Eye on
O-I Glass: The company has been benefiting from strong demand for glass packaging, higher selling prices, and efforts to improve productivity and efficiency. Its consistent investments in boosting production capacity to meet the strong demand bode well. OI’s cost-control measures have helped it negate the impacts of higher costs and supply-chain issues on its margins. Its margin expansion initiative is expected to reap more than $100 million in benefits in 2023. Focus on acquisitions and innovations is also likely to fuel growth. Its glass melting technology, known as the MAGMA program, intends to reduce the amount of capital required to install, rebuild and operate its furnaces. The MAGMA program is being implemented using a multi-generation development roadmap. O-I Glass is on track with its first MAGMA greenfield plant in Kentucky starting in 2024. Backed by these tailwinds, shares of the company have gained 45% over the past year.
Perrysburg, OH-based O-I Glass manufactures and sells glass containers to food and beverage manufacturers, primarily in the Americas, Europe and the Asia Pacific. OI’s earnings estimates for fiscal 2023 have moved 23% north over the past 30 days. The consensus estimate indicates 37.8% year-over-year growth. OI has a trailing four-quarter earnings surprise of 21.2%, on average, and a long-term estimated earnings growth rate of 13.9%. The company currently sports a Zacks Rank #1 (Strong Buy).
Apogee: The company’s Architectural Framing Systems segment continues to witness solid year-over-year growth and margin expansion despite significant supply-chain and inflation headwinds due to pricing actions and the benefits of completed restructuring and cost-saving actions. The Architectural Services segment has been winning several project awards and building a project pipeline for the coming years. The Architectural Glass segment is gaining on improved pricing and product mix, which reflects the company’s strategic shift toward more premium products. Following a detailed strategic review of its business, the company has embarked on a strategy to deliver profitable growth and improved returns. It has announced three-year financial goals, which include ROIC greater than 12%, an operating margin of more than 10% and revenue growth above 1.2 times growth of the non-residential construction market.
The Zacks Consensus Estimate for APOG’s ongoing year’s earnings has moved 0.5% north over the past 30 days. This Minneapolis, MN-based entity has a trailing four-quarter earnings surprise of 41%, on average. Apogee currently carries a Zacks Rank #2 (Buy).
Price & Consensus: APOG
View: The company is seeing improvement in its top line, aided by growth across all product lines, including Smart Glass, Smart Building Platform and Smart Building Technologies. VIEW has executed further cost-reduction actions, which are expected to reduce structural fixed costs by $50 million per year. The company has been significantly expanding its product portfolio, bringing several smart building products to the market. With a solid customer base and investment to boost its manufacturing capacity, VIEW is poised well for growth. Increasing customer interest in smart windows, following the passage of the Inflation Reduction Act of 2022, which includes a 30-50% ITC, bodes well. VIEW is also working on forging business relationships with real estate brokers to spread awareness of its products and their benefits.
The Zacks Consensus Estimate for this Milpitas, CA-based player’s current-year bottom line is pegged at a loss of 72 cents, unchanged over the past 30 days. The company currently has a Zacks Rank of 2.
Price & Consensus: VIEW
Crown Electrokinetics: The company recently acquired Amerigen 7, an emerging leader in the fields of distributed antenna systems and the construction of fiber optic infrastructure. Amerigen 7, now renamed Crown Fiber Optics, is expected to contribute $30 million to revenues and $10 million to EBITDA in 2023. The company entered two agreements with leading infrastructure solutions providers, expanding its U.S. footprint while diversifying its revenue base. CRKN is focusing on commercializing electrokinetic technology for use in the smart glass market. It recently closed a line of credit for up to $100 million. This will help the company expand current fiber optic construction projects not only in the five Great Lakes states, wherein it has prime contract status, but will also help enhance its presence in other regions. The company is pursuing distributed antenna systems (“DAS”) projects and this new line of credit will allow for expansion into the fast-growing DAS market. CRKN continues to review and restructure its organization, helping it cut costs. CRKN is expected to benefit from the Inflation Reduction Act.
Crown Electrokinetics, a smart glass technology company, offers electrokinetic film technology for smart or dynamic glass. The Zacks Consensus Estimate for this Corvallis, OR-based entity’s 2023 bottom line is pegged at a loss of 30 cents. CRKN has a trailing four-quarter earnings surprise of 13.5%, on average. The company currently has a Zacks Rank #3 (Hold).
Price & Consensus: CRKN
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4 Stocks to Watch From the Promising Glass Products Industry
The Zacks Glass Products industry is poised to benefit from the rising demand for glass, both as a packaging option and for use in construction. This is backed by its endless recyclability and sustainability benefits. Growing demand for energy-efficient, smart windows or smart glass panels will be a catalyst for the industry, going forward.
O-I Glass (OI - Free Report) , Apogee Enterprises (APOG - Free Report) , View and Crown Electrokinetics (CRKN - Free Report) are likely to gain from solid end-market demand, focus on bringing innovative products and cost-control efforts.
About the Industry
The Zacks Glass Products industry comprises companies that manufacture and sell glass products. One company produces glass containers for packaging beverages, food and pharmaceuticals. Another player in the industry offers coated and high-performance glass used in customized window and wall systems. The same company caters to the construction industry, ranging from commercial and multi-family residential to institutional buildings. It also provides coated glass for picture framing, wall décor and display applications. One company offers smart glass windows using artificial intelligence to adjust and suitably increase access to natural light, while minimizing heat and glare. Another company developed an electrokinetic technology, which can be retrofitted on any glass, enabling buildings to cut energy consumption and save on heating and cooling costs, the need of the hour.
Major Trends Shaping the Future of the Glass Products Industry
Glass Packaging Gaining Popularity: Glass is increasingly becoming the packaging choice for customers, given its endless recyclability without a loss in quality. More than 80% of recycled bottles are used in making new bottles. This also helps negate the need for raw materials. Every ton of recycled glass saves 1,400 pounds of sand, 430 pounds of soda ash and 400 pounds of limestone/dolomite. As consumers are becoming more aware of their environmental footprint, a sharp spike in demand is noticed for refillable bottles, which offer the most sustainable and economical rigid packaging option. Manufacturers are focusing on improving their products by reducing the weight of the bottles for more convenient handling. Also, premium cosmetic and beverage brands are opting for glass to differentiate their products through packaging and ensure quality maintenance. Per Statista, the global market value of glass packaging is expected to surge to $88.3 billion in 2032 from $55.5 billion in 2022.
Demand in the Construction Sector Holds Promise: In recent years, the use of glass gained popularity in construction as a sustainable alternative to traditional building materials, including wood and bricks, owing to its cost-effectiveness, lightweight, immense strength and environmentally friendly factor. Glass increases the influx of natural light in the building, reduces energy consumption, minimizes carbon emissions and enhances the aesthetic appeal of structures. Rising construction activities across the residential, commercial and industrial sectors are likely to fuel the glass products industry’s growth. Increasing investments in the renovation or modernization of the existing infrastructure will also drive the industry’s growth. Various governments are introducing favorable policies and granting incentives to promote green construction to minimize greenhouse emissions and energy consumption, which bode well for the industry. The global construction glass market is expected to be around $52.7 billion in 2023 and grow thereafter, seeing a CAGR of 7%, to reach $190.3 billion by 2027.
Technological Innovation is the Key: Some players revolutionized the industry by bringing smart glass panels or smart windows to the market. These innovative products are designed to enable people to lead healthier and more productive lives by increasing access to daylight and views, while minimizing glare and heat from the sun, and keeping occupants comfortable. These products also help cut down on energy consumption from lighting and HVAC, thus reducing carbon emissions. The Inflation Reduction Act of 2022, already signed into law, will be a game changer for the industry as it includes a 30-50% Investment Tax Credit (ITC) for smart windows.
Pricing Actions, Improving Efficiency to Offset Cost Inflation: The industry is witnessing rising costs for transportation, chemical and fuel, and supply-chain headwinds. Therefore, industry players are increasingly focusing on pricing actions and cost reduction, and resorting to automation in manufacturing to boost productivity and efficiency.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Glass Products industry is a 5-stock group within the broader Industrial Products sector. The industry currently carries a Zacks Industry Rank #14, which places it in the top 6% of the 251 Zacks industries.
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bullish prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a solid earnings outlook for the constituent companies in aggregate.
Before we present a few Glass Products stocks for investors’ consideration, it is worth looking at the industry’s stock-market performance and its valuation picture.
Industry Versus S&P 500 & Sector
The Glass Products industry has outperformed the S&P 500 and the sector over the past year. The stocks in this industry have gained 13% against the Industrial Products sector’s growth of 5.5%. The S&P 500 composite has gained 3% during the said time frame.
One-Year Price Performance
Industry's Current Valuation
Based on the forward 12-month EV/EBITDA ratio, a commonly-used multiple for valuing Glass Products companies, we see that the industry is currently trading at 5.59X compared with the S&P 500’s 19.75X and the Industrial Products sector’s 20.00X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio (F12M)
Enterprise Value/EBITDA (EV/EBITDA) Ratio (F12M)
Over the last five years, the industry has traded as high as 6.53X and as low as 4.33X, the median being 5.98X.
4 Glass Products Stocks to Keep an Eye on
O-I Glass: The company has been benefiting from strong demand for glass packaging, higher selling prices, and efforts to improve productivity and efficiency. Its consistent investments in boosting production capacity to meet the strong demand bode well. OI’s cost-control measures have helped it negate the impacts of higher costs and supply-chain issues on its margins. Its margin expansion initiative is expected to reap more than $100 million in benefits in 2023. Focus on acquisitions and innovations is also likely to fuel growth. Its glass melting technology, known as the MAGMA program, intends to reduce the amount of capital required to install, rebuild and operate its furnaces. The MAGMA program is being implemented using a multi-generation development roadmap. O-I Glass is on track with its first MAGMA greenfield plant in Kentucky starting in 2024. Backed by these tailwinds, shares of the company have gained 45% over the past year.
Perrysburg, OH-based O-I Glass manufactures and sells glass containers to food and beverage manufacturers, primarily in the Americas, Europe and the Asia Pacific. OI’s earnings estimates for fiscal 2023 have moved 23% north over the past 30 days. The consensus estimate indicates 37.8% year-over-year growth. OI has a trailing four-quarter earnings surprise of 21.2%, on average, and a long-term estimated earnings growth rate of 13.9%. The company currently sports a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: OI
Apogee: The company’s Architectural Framing Systems segment continues to witness solid year-over-year growth and margin expansion despite significant supply-chain and inflation headwinds due to pricing actions and the benefits of completed restructuring and cost-saving actions. The Architectural Services segment has been winning several project awards and building a project pipeline for the coming years. The Architectural Glass segment is gaining on improved pricing and product mix, which reflects the company’s strategic shift toward more premium products. Following a detailed strategic review of its business, the company has embarked on a strategy to deliver profitable growth and improved returns. It has announced three-year financial goals, which include ROIC greater than 12%, an operating margin of more than 10% and revenue growth above 1.2 times growth of the non-residential construction market.
The Zacks Consensus Estimate for APOG’s ongoing year’s earnings has moved 0.5% north over the past 30 days. This Minneapolis, MN-based entity has a trailing four-quarter earnings surprise of 41%, on average. Apogee currently carries a Zacks Rank #2 (Buy).
Price & Consensus: APOG
View: The company is seeing improvement in its top line, aided by growth across all product lines, including Smart Glass, Smart Building Platform and Smart Building Technologies. VIEW has executed further cost-reduction actions, which are expected to reduce structural fixed costs by $50 million per year. The company has been significantly expanding its product portfolio, bringing several smart building products to the market. With a solid customer base and investment to boost its manufacturing capacity, VIEW is poised well for growth. Increasing customer interest in smart windows, following the passage of the Inflation Reduction Act of 2022, which includes a 30-50% ITC, bodes well. VIEW is also working on forging business relationships with real estate brokers to spread awareness of its products and their benefits.
The Zacks Consensus Estimate for this Milpitas, CA-based player’s current-year bottom line is pegged at a loss of 72 cents, unchanged over the past 30 days. The company currently has a Zacks Rank of 2.
Price & Consensus: VIEW
Crown Electrokinetics: The company recently acquired Amerigen 7, an emerging leader in the fields of distributed antenna systems and the construction of fiber optic infrastructure. Amerigen 7, now renamed Crown Fiber Optics, is expected to contribute $30 million to revenues and $10 million to EBITDA in 2023. The company entered two agreements with leading infrastructure solutions providers, expanding its U.S. footprint while diversifying its revenue base. CRKN is focusing on commercializing electrokinetic technology for use in the smart glass market. It recently closed a line of credit for up to $100 million. This will help the company expand current fiber optic construction projects not only in the five Great Lakes states, wherein it has prime contract status, but will also help enhance its presence in other regions. The company is pursuing distributed antenna systems (“DAS”) projects and this new line of credit will allow for expansion into the fast-growing DAS market. CRKN continues to review and restructure its organization, helping it cut costs. CRKN is expected to benefit from the Inflation Reduction Act.
Crown Electrokinetics, a smart glass technology company, offers electrokinetic film technology for smart or dynamic glass. The Zacks Consensus Estimate for this Corvallis, OR-based entity’s 2023 bottom line is pegged at a loss of 30 cents. CRKN has a trailing four-quarter earnings surprise of 13.5%, on average. The company currently has a Zacks Rank #3 (Hold).
Price & Consensus: CRKN