International Paper: Preparing for Q4 Earnings Amidst Predictions of Profit Decline
Company Overview
International Paper Company (IP), based in Memphis, Tennessee, is a key player in the global market for renewable fiber-based products, boasting a market capitalization of $18.7 billion. The company focuses on corrugated packaging solutions and pulp used in personal care items, catering to various industries. Investors are awaiting the company’s fiscal Q4 earnings announcement, scheduled for Thursday, Jan. 30, prior to market open.
Profit Forecast and Recent Performance
Analysts anticipate that IP’s profits will drop significantly, forecasting an 85.4% year-over-year decline in earnings per share (EPS), bringing it down to $0.06. Historically, IP has managed to meet or exceed Wall Street’s earnings expectations in three of the last four quarters, although it did fall short once. Notably, the company exceeded consensus estimates by 83.3% in the most recent quarter.
Future Earnings Projections
Looking ahead to fiscal 2024, analysts predict an EPS of $1.18 for IP, reflecting a decrease of 45.4% from $2.16 in fiscal 2023. However, optimism grows for fiscal 2025, with a projected rebound—EPS is expected to jump 155.9% year-over-year to $3.02.
Stock Performance Overview
In the last year, IP shares have experienced a substantial increase, climbing 47.1%. This performance surpasses both the broader S&P 500 Index’s ($SPX) 22.1% return and the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 27.4% gains during the same period.
Strategic Moves Driving Growth
IP’s recent market success can be attributed to several key strategies. The appointment of CEO Andrew Silvernail, the significant $9.4 billion acquisition of DS Smith, and various operational efficiency initiatives are all designed to enhance profitability. These strategies have positioned the company well for ongoing growth within the packaging industry.
Recent Earnings Report and Investor Sentiment
On October 31, IP’s shares soared by 13.3%, driven by a strong third-quarter earnings statement. The company reported adjusted earnings of $0.44 per share, surpassing expectations. Net sales reached $4.7 billion, slightly above forecasts, as increased prices helped counter lower sales volumes. Investor excitement was also bolstered by positive developments regarding the DS Smith acquisition, which is projected to generate at least $514 million in pre-tax cash synergies, thus enhancing IP’s foothold in the European packaging market.
Analyst Ratings and Price Targets
The overall consensus among analysts on International Paper’s stock is moderately bullish, reflected in a “Moderate Buy” rating. Out of nine analysts, five recommend a “Strong Buy,” one a “Moderate Buy,” two suggest a “Hold,” and one analyst rates it a “Strong Sell.” The average price target for IP stands at $56.60, indicating a potential upside of 2.1% from current levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
