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International Paper Co (IP)
NYSE:IP
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International Paper Co
(NYSE:IP)
66Neutral
Positive Factors
Earnings
International Paper is targeting higher EBITDA in 2027 compared to forecasts, indicating potential growth.
Market Position
IP's net promoter score has nearly doubled over the past 2-3 years and now leads its peers, allowing IP to negotiate from a position of strength and drive share recovery.
Operational Efficiency
IP sees significant opportunities to streamline the business, since SMDS didn't integrate transactions well and certain facilities are running at 30-50% utilization.
Negative Factors
Financial Performance
IP's earnings dropped 24% from 2019 to 2023 compared to peers who grew by 19%, indicating a loss in market share and margin compression.
Free Cash Flow
With approximately $500 million of SMDS acquisition and restructuring costs, free cash flow will be under pressure in 2025.
Market Environment
Overall, volumes seem weaker than prior expectations, reflecting the current market environment.
International Paper Co (IP) vs. S&P 500 (SPY)
Market Cap
$24.67B
Dividend Yield4.14%
Average Volume (3M)7.00M
Price to Earnings (P/E)29.7
Beta (1Y)0.73
Revenue Growth-1.57%
EPS Growth84.85%
CountryUS
Employees37,000
SectorConsumer Cyclical
Sector Strength55
IndustryPackaging & Containers
Share Statistics
EPS (TTM)1.57
Shares Outstanding527,875,730
10 Day Avg. Volume6,967,213
30 Day Avg. Volume7,002,572
Financial Highlights & Ratios
PEG Ratio0.35
Price to Book (P/B)N/A
Price to Sales (P/S)1.45
Price to Cash Flow (P/CF)17.00
P/FCF Ratio14.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$59.23Price Target Upside20.83% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
International Paper Co Business Overview & Revenue Model
Company DescriptionInternational Paper Company operates as a packaging company primarily in United States, the Middle East, Europe, Africa, Pacific Rim, Asia, and rest of the Americas. It operates through two segments: Industrial Packaging and Global Cellulose Fibers. The Industrial Packaging segment manufactures containerboards, including linerboard, medium, whitetop, recycled linerboard, recycled medium, and saturating kraft. The Global Cellulose Fibers segment provides fluff, market, and specialty pulps that are used in absorbent hygiene products, such as baby diapers, feminine care, adult incontinence, and other non-woven products; tissue and paper products; and non-absorbent end applications, including textiles, filtration, construction material, paints and coatings, reinforced plastics, and other applications. It sells its products directly to end users and converters, as well as through agents, resellers, and paper distributors. The company was founded in 1898 and is headquartered in Memphis, Tennessee.
How the Company Makes MoneyInternational Paper Co generates revenue through the manufacturing and sale of fiber-based packaging, pulp, and paper products. The company's primary revenue streams include industrial packaging solutions, such as corrugated boxes and containerboard, which are used extensively in shipping and logistics. In addition to packaging, the company produces cellulose fibers, used in products like diapers, tissues, and other absorbent hygiene products. International Paper also earns from the sale of printing papers used in offices and commercial printing. The company's earnings are bolstered by its extensive global operations, strategic partnerships, and a focus on sustainability which appeals to environmentally conscious consumers and businesses.
International Paper Co Financial Statement Overview
Summary
International Paper presents a mixed financial performance with declining revenue and profitability but strong cash flow generation and a stable balance sheet. The company faces challenges in maintaining operational efficiency and profitability, but its strong cash generation provides a buffer. While the balance sheet remains stable with manageable leverage, the decreasing return on equity suggests a need for improvement in shareholder returns.Income Statement
International Paper's income statement reveals a declining trend in revenue with a decrease from $21.16 billion in 2022 to $18.62 billion in 2024. The gross profit margin for 2024 stands at 28.15%, and the net profit margin is 3.02%, showing a moderate level of profitability. However, the EBIT margin has dropped significantly from 9.15% in 2022 to 2.99% in 2024, indicating a decrease in operational efficiency. Overall, the company demonstrates a stable but declining revenue and profitability trajectory, posing a potential risk to financial performance.65
Positive
Balance Sheet
International Paper's balance sheet shows a debt-to-equity ratio of 0.72 as of 2024, indicating a moderate leverage level. The return on equity for 2024 is 6.88%, which is relatively low compared to previous years, reflecting reduced profitability. The equity ratio stands at 35.84%, suggesting a stable capital structure. Despite the company's manageable debt levels, the declining ROE raises concerns about shareholder returns.70
Positive
Cash Flow
The cash flow statement highlights a positive free cash flow growth rate from $692 million in 2023 to $1.678 billion in 2024, demonstrating strong cash generation capabilities. The operating cash flow to net income ratio is 2.99 in 2024, indicating robust cash generation compared to net income. The free cash flow to net income ratio of 2.99 further reinforces the company's solid liquidity position. Overall, while cash flow performance is strong, the sustainability of these levels remains a potential area of concern.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 18.62B | 18.92B | 21.16B | 19.36B | 20.58B | Gross Profit |
| 5.24B | 5.29B | 6.02B | 5.53B | 6.21B | EBIT |
| 557.00M | 1.19B | 1.94B | 1.67B | 1.72B | EBITDA |
| 1.88B | 2.27B | 2.99B | 2.54B | 2.06B | Net Income Common Stockholders |
| 557.00M | 288.00M | 1.50B | 811.00M | 482.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.17B | 1.11B | 804.00M | 1.54B | 5.45B | Total Assets |
| 22.80B | 23.26B | 23.94B | 25.24B | 31.72B | Total Debt |
| 5.85B | 5.91B | 5.86B | 5.82B | 14.72B | Net Debt |
| 4.68B | 4.79B | 5.06B | 4.52B | 14.13B | Total Liabilities |
| 14.63B | 14.91B | 15.44B | 16.16B | 23.85B | Stockholders Equity |
| 8.17B | 8.36B | 8.50B | 9.08B | 7.85B |
| Cash Flow | Free Cash Flow | |||
| 757.00M | 692.00M | 1.24B | 1.48B | 2.31B | Operating Cash Flow |
| 1.68B | 1.83B | 2.17B | 2.03B | 3.06B | Investing Cash Flow |
| -808.00M | -668.00M | -608.00M | 6.05B | -269.00M | Financing Cash Flow |
| -775.00M | -866.00M | -2.05B | -7.38B | -2.70B |
International Paper Co Technical Analysis
Negative
49.02
Price Trends
53.32
Negative
54.59
Negative
50.71
Negative
Market Momentum
<0.01
Negative
51.00
Neutral
46.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IP, the sentiment is Negative. The current price of 49.02 is below the 20-day moving average (MA) of 51.65, below the 50-day MA of 53.32, and below the 200-day MA of 50.71, indicating a bearish trend. The MACD of <0.01 indicates Negative momentum. The RSI at 51.00 is Neutral, neither overbought nor oversold. The STOCH value of 46.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IP.
International Paper Co Risk Analysis
International Paper Co disclosed 22 risk factors in its most recent earnings report. International Paper Co reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
International Paper Co Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $13.33B | 19.33 | 31.75% | 2.21% | 4.68% | 40.68% | |
71 Outperform | $17.04B | 21.21 | 19.03% | 2.84% | 7.45% | 5.26% | |
68 Neutral | $4.23B | 25.98 | 6.42% | 5.12% | -6.93% | -65.66% | |
66 Neutral | $24.67B | 29.72 | 6.74% | 4.14% | -1.57% | 84.85% | |
65 Neutral | $9.75B | 23.49 | 16.41% | 1.29% | -1.53% | -5.16% | |
59 Neutral | $11.74B | 10.16 | -1.06% | 4.15% | 1.27% | -16.61% | |
54 Neutral | $12.89B | 16.19 | 20.60% | 5.89% | -3.54% | 25.25% |
* Consumer Cyclical Sector Average
Performance Comparison
IP
International Paper Co
49.02
12.61
34.63%
AVY
Avery Dennison
168.86
-42.50
-20.11%
CCK
Crown Holdings
83.39
4.80
6.11%
PKG
Packaging
189.44
7.72
4.25%
SON
Sonoco Products
42.89
-12.03
-21.90%
AMCR
Amcor
9.02
0.38
4.40%
International Paper Co Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -14.75% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a strategic focus on growth and profitability, with significant investments and strategic acquisitions like DS Smith aimed at positioning International Paper as a leader in sustainable packaging. Despite these positive strides, the company faces challenges with volume declines and reliability issues in its operations, which it is addressing with targeted cost reductions and operational improvements.Highlights
DS Smith Acquisition Approval and Strategic Integration
The European Commission approved the acquisition of DS Smith with minimal concerns, leading to a strategic integration aimed at creating a global leader in sustainable packaging solutions.
Target to Achieve $4 Billion EBITDA
International Paper is on track to achieve $4 billion EBITDA medium-term, with plans for cost reductions and commercial improvements contributing significantly to this target.
Investment in New Corrugated Box Facility
International Paper is investing in a new state-of-the-art corrugated box facility in Waterloo, Iowa, designed to reduce costs by 20% and improve service and quality.
Implementation of 80/20 Lighthouses
The company is scaling its 80/20 lighthouse strategy to improve productivity by over 20% at additional box plants, optimizing resources and reducing complexity.
Lowlights
Volume Declines Due to Contract Restructuring
Significant year-over-year volume declines were experienced due to expected effects from contract restructuring, impacting overall performance.
Higher Costs and Reliability Issues
The company faced higher costs and reliability issues at some mills, contributing to a $350 million cost impact in 2024.
Facility Closures and Accelerated Depreciation
International Paper incurred significant expenses due to the closure of facilities, including $56 million in accelerated depreciation for the fourth quarter.
Company Guidance
During the fourth quarter 2024 earnings call, International Paper provided detailed guidance on its strategic initiatives and financial targets. The company aims to achieve $4 billion of EBITDA in the medium term, excluding DS Smith base earnings or synergies. This includes a $1.2 billion cost reduction, net of inflation, with plans to remove approximately $1.6 billion from the system. The company has already initiated cost-cutting actions, including the closure of five box plants and a Global Cellulose Fibers mill, which are expected to reduce costs by $110 million. Additionally, they plan to reduce corporate costs by $120 million annually. Commercial improvements are anticipated to add $800 million to the target, with a focus on profitable market share growth and customer-centric strategies. The company is also investing in a new corrugated box facility in Waterloo, Iowa, which will support growth in the protein segment and is expected to start in 2026. These efforts align with the company's goal to enhance operational reliability and optimize its supply chain to unlock significant value for stakeholders.International Paper Co Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
International Paper Co Announces Leadership Changes
Positive
Feb 28, 2025
On February 28, 2025, International Paper announced leadership changes with Tim Nicholls promoted to Executive Vice President and President of DS Smith, and Lance Loeffler appointed as Senior Vice President and Chief Financial Officer. These appointments are expected to support International Paper’s strategic focus on sustainable packaging solutions and its growth in North America and EMEA, following the acquisition of DS Smith.
Executive/Board ChangesM&A TransactionsBusiness Operations and Strategy
International Paper Co Appoints David Robbie as Director
Positive
Feb 11, 2025
On February 11, 2025, International Paper’s Board of Directors appointed David A. Robbie as an independent director, effective immediately. Mr. Robbie, an experienced corporate leader, was also appointed to the Audit and Finance and Public Policy and Environment committees. His appointment follows International Paper’s acquisition of DS Smith, positioning the company as a global leader in sustainable packaging. Additionally, the Board approved a new Executive Severance Plan, replacing the 2005 policy, to provide enhanced severance benefits to executive officers, aiming to strengthen executive retention and compensation programs.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.