Here's a trivia question for this weekend's barbecue party: When Motley Fool Inside Value recommendation Coca-Cola (NYSE:KO) was added to the Dow Jones 30, what company did it displace? Answer: packaging company Owens-Illinois (NYSE:OI).

That was a good time to buy Coke, too. It's been an eight-bagger since then.

But there's more to life than trivia. Discussion is also an integral part of showing off your knowledge. So here's your discussion question for the barbecue this weekend: Is Owens-Illinois a buy at 11.6 times trailing earnings?

A brief history
There's a nasty little word lurking around at Owens-Illinois -- asbestos. The company has accrued $2.85 billion (as of the end of 2004), not including insurance recoveries, for asbestos-related liabilities. The court cases continue to pile up-- there are 33,000 lawsuits still outstanding -- and the company cannot estimate its eventual total liability.

Owens-Illinois would love for Congress to settle the matter, and it seemed at one time that Democrats and Republicans had agreed on a $140 billion settlement fund. But wrangling over future lawsuits, and now with Hurricane Katrina taking center stage, it's uncertain that anything will be done about asbestos this year.

That uncertain outlook hurts other stocks with asbestos liability concerns like W.R. Grace (NYSE:GRA) and Motley Fool Income Investor pick RPM International (NYSE:RPM).

By the numbers
Earnings estimates for 2005 had been in the range of $1.76 to $2 a share. That was a nice leap from $1.43 last year, and analysts expected the company to earn $2.33 the following year -- pricing the stock at 9.4 times forward earnings.

The company rained on that parade today by saying earnings would fall below $1.76, but the company didn't specify how far they would fall. Inflationary pressures and isolated operating problems were blamed, and these aren't problems that will cease anytime soon.

The trickle-down effect was that the company's debt reduction will fall below the lower end of the $150 million to $200 million estimates. With a net debt (total debt minus cash) of $5.2 billion and an annual interest expense around $500 million, debt reduction is a significant need.

The prospects
The company has seen healthy growth, with revenues growing 33% for the trailing 12 months. Performance ratios also appear to be in good shape, with operating margins of 14% and a return on equity of 19.1%, Analysts expect it to compound earnings by 11% annually for the next five years (a slightly higher growth rate than the S&P 500).

Based on the price-to-earnings ratio and expected earnings growth, the stock looks cheap. Still, with the asbestos litigation overhead and inflationary pressures, the stock's outlook is uncertain. Let me know whether you and your buddies at the barbecue decide it's a buy or sell. In my book, Owens-Illinois is to be avoided at all costs until the asbestos liability is resolved.

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Fool contributor W.D. Crotty does not own shares in any of the companies mentioned. Click here to see The Motley Fool's disclosure policy.