When close to half the companies operating in the Packaging industry in the United States have price-to-sales ratios (or "P/S") above 0.8x, you may consider O-I Glass, Inc. (NYSE:OI) as an attractive investment with its 0.3x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

How O-I Glass Has Been Performing

With its revenue growth in positive territory compared to the declining revenue of most other companies, O-I Glass has been doing quite well of late. One possibility is that the P/S ratio is low because investors think the company's revenue is going to fall away like everyone else's soon. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on O-I Glass.

How Is O-I Glass' Revenue Growth Trending?

In order to justify its P/S ratio, O-I Glass would need to produce sluggish growth that's trailing the industry.

Retrospectively, the last year delivered a decent 3.6% gain to the company's revenues. The solid recent performance means it was also able to grow revenue by 17% in total over the last three years. So we can start by confirming that the company has actually done a good job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 2.4% per annum during the coming three years according to the eight analysts following the company. That's shaping up to be similar to the 2.3% each year growth forecast for the broader industry.

With this in consideration, we find it intriguing that O-I Glass' P/S is lagging behind its industry peers. It may be that most investors are not convinced the company can achieve future growth expectations.

The Bottom Line On O-I Glass' P/S

Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

We've seen that O-I Glass currently trades on a lower than expected P/S since its forecast growth is in line with the wider industry. The low P/S could be an indication that the revenue growth estimates are being questioned by the market. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

You always need to take note of risks, for example - O-I Glass has 1 warning sign we think you should be aware of.

If these risks are making you reconsider your opinion on O-I Glass, explore our interactive list of high quality stocks to get an idea of what else is out there.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.