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International Paper Co (IP)
NYSE:IP
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International Paper Co
(NYSE:IP)
Rating:66Neutral
Price Target:
$53.00
▲( 11.18% Upside)
Positive Factors
Customer Relations
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.
Financial Performance
International Paper is targeting higher EBITDA in 2027 compared to forecasts, indicating potential growth.
Operational Strategy
The strategic review of Global Cellulose Fibers continues with interested parties in the due diligence phase, indicating potential future opportunities.
Negative Factors
Earnings Quality
There is a wide range of demand uncertainty affecting the company's earnings quality.
Market Performance
Despite actions taken, such as mill closures and headcount reduction, IP's market share losses accelerated to about 5% and the margin gap with peers widened.
Market Share
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.
International Paper Co (IP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$25.67B
Dividend Yield3.8%
Average Volume (3M)4.73M
Price to Earnings (P/E)41.5
Beta (1Y)0.72
Revenue Growth7.49%
EPS Growth123.95%
CountryUS
Employees65,000
SectorConsumer Cyclical
Sector Strength76
IndustryPackaging & Containers
Share Statistics
EPS (TTM)0.23
Shares Outstanding527,901,500
10 Day Avg. Volume5,365,490
30 Day Avg. Volume4,730,443
Financial Highlights & Ratios
PEG Ratio-0.01
Price to Book (P/B)1.06
Price to Sales (P/S)0.00
P/FCF Ratio71.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$56.76Price Target Upside19.07% 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 primarily through the sale of packaging and cellulose fiber products. In the Industrial Packaging segment, the company produces containerboard and corrugated packaging materials that are sold to manufacturers, retailers, and logistics providers to protect goods during transportation. This segment is a key revenue driver, benefiting from the growing demand for e-commerce and sustainable packaging solutions. The Global Cellulose Fibers segment supplies fluff pulp for absorbent hygiene products, papergrade pulp for printing and writing papers, and specialty pulp for various applications. The company's earnings are also supported by its strategic partnerships and investments in innovation, which enhance its product offerings and operational efficiencies.
International Paper Co Financial Statement Overview
Summary
International Paper Co showcases strong revenue growth and gross margins, but faces challenges in profitability and cash flow conversion. While the balance sheet demonstrates a strong leverage position and stable equity ratio, focus on improving net profitability and cash flow generation remains crucial.Income Statement
The company has shown a solid gross profit margin of 27.28% for TTM (Trailing-Twelve-Months), indicating efficient cost management. However, the net profit margin stands at 1.99%, reflecting challenges in converting revenue into profit. Revenue has grown by 6.89% from the previous year, showcasing a positive trend in sales. EBIT and EBITDA margins are at 7.72% and 9.78% respectively, highlighting moderate operational efficiency.68
Positive
Balance Sheet
The debt-to-equity ratio is 0.56, suggesting a balanced leverage position. The return on equity (ROE) is relatively low at 2.19% for TTM, indicating modest returns on shareholders' investments. An equity ratio of 43.94% shows a stable capital structure with a comfortable buffer against liabilities.73
Positive
Cash Flow
Free cash flow has decreased, resulting in a negative growth rate of -57.06% in TTM. However, the operating cash flow to net income ratio is strong at 2.51, indicating effective cash generation relative to reported profits. The free cash flow to net income ratio stands at 0.82, reflecting a reasonable conversion of earnings into free cash.65
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 19.90B | 18.62B | 18.92B | 21.16B | 19.36B | 20.58B | Gross Profit |
| 5.43B | 5.24B | 5.29B | 6.02B | 5.53B | 6.21B | EBIT |
| 1.54B | 557.00M | 1.19B | 1.94B | 1.67B | 1.72B | EBITDA |
| 1.95B | 1.88B | 2.27B | 2.99B | 2.54B | 2.06B | Net Income Common Stockholders |
| 397.00M | 557.00M | 288.00M | 1.50B | 811.00M | 482.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.16B | 1.17B | 1.11B | 804.00M | 1.54B | 5.45B | Total Assets |
| 41.17B | 22.80B | 23.26B | 23.94B | 25.24B | 31.72B | Total Debt |
| 10.10B | 5.85B | 5.91B | 5.86B | 5.82B | 14.72B | Net Debt |
| 8.94B | 4.68B | 4.79B | 5.06B | 4.52B | 14.13B | Total Liabilities |
| 23.08B | 14.63B | 14.91B | 15.44B | 16.16B | 23.85B | Stockholders Equity |
| 18.09B | 8.17B | 8.36B | 8.50B | 9.08B | 7.85B |
| Cash Flow | Free Cash Flow | ||||
| 325.00M | 757.00M | 692.00M | 1.24B | 1.48B | 2.31B | Operating Cash Flow |
| 995.00M | 1.68B | 1.83B | 2.17B | 2.03B | 3.06B | Investing Cash Flow |
| -146.00M | -808.00M | -668.00M | -608.00M | 6.05B | -269.00M | Financing Cash Flow |
| -563.00M | -775.00M | -866.00M | -2.05B | -7.38B | -2.70B |
International Paper Co Technical Analysis
Negative
47.67
Price Trends
48.34
Negative
51.27
Negative
50.72
Negative
Market Momentum
0.33
Negative
50.21
Neutral
35.58
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 47.67 is above the 20-day moving average (MA) of 46.77, below the 50-day MA of 48.34, and below the 200-day MA of 50.72, indicating a neutral trend. The MACD of 0.33 indicates Negative momentum. The RSI at 50.21 is Neutral, neither overbought nor oversold. The STOCH value of 35.58 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 1 New Risks
1.
Our financial results and businesses, including our Ilim joint venture, have been adversely and may continue to be affected by the current military conflict between Russia and Ukraine, including ongoing or future sanctions and export controls targeting Russia and other responses to Russia's invasion of Ukraine. Q3, 2022
International Paper Co Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $13.88B | 20.43 | 31.95% | 1.95% | 3.57% | 26.92% | |
73 Outperform | $11.42B | 21.08 | 21.30% | 1.03% | 0.90% | 34.40% | |
73 Outperform | $17.32B | 20.16 | 20.07% | 2.60% | 9.47% | 19.37% | |
70 Outperform | $4.45B | 29.32 | 5.54% | 4.59% | -4.58% | -61.14% | |
66 Neutral | $25.67B | 41.46 | 3.01% | 3.80% | 7.49% | 123.95% | |
62 Neutral | $6.84B | 11.22 | 2.83% | 3.93% | 2.65% | -21.93% | |
56 Neutral | $20.66B | 16.08 | 20.71% | 5.59% | -2.29% | 24.05% |
* Consumer Cyclical Sector Average
Performance Comparison
IP
International Paper Co
47.67
3.83
8.74%
AVY
Avery Dennison
177.55
-45.66
-20.46%
CCK
Crown Holdings
97.04
14.55
17.64%
PKG
Packaging
190.70
11.43
6.38%
SON
Sonoco Products
45.69
-12.33
-21.25%
AMCR
Amcor
8.96
-0.49
-5.19%
International Paper Co Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 1.04%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook, with significant achievements in cost reduction, integration of DS Smith, and improvements in customer experience and commercial performance. However, these were offset by challenges such as soft demand in key markets, economic uncertainties, and the impact of accelerated depreciation costs. The company remains focused on its transformation strategy and is cautious about the economic outlook.Q1-2025 Updates
Positive Updates
Strong Adjusted EBITDA Growth
International Paper's first quarter results showed higher sales and earnings driven by the DS Smith acquisition, sales price increases in North America, and benefits from transformation initiatives. The company reported an adjusted EBITDA run rate of nearly $800 million for the first half of the year, with expectations to accelerate to $1.1 billion by Q4.
Successful Integration of DS Smith
The integration of DS Smith has been successful, with a focus on achieving significant synergies. The contributions from the legacy DS Smith business accounted for $104 million for two months of the first quarter.
Cost Reduction Achievements
International Paper has made significant progress in cost reduction, achieving approximately $400 million of annual cost savings so far, with additional opportunities for $200 million of savings by the end of 2025.
Improved Customer Experience
The company has seen improvements in customer experience, with better service and on-time delivery resulting in a best-in-class Net Promoter Score.
Positive Commercial Progress in North America
The North American Packaging Solutions business closed its volume gap to market by approximately 500 basis points, showing better-than-expected commercial improvement.
Negative Updates
Soft Demand Across Markets
Industry demand in North America was down 2% in the first quarter, with similar softness in European markets. The company remains cautious about the outlook given strong negative consumer and business sentiment.
Accelerated Depreciation Costs
The company's earnings per share were impacted by accelerated depreciation charges related to footprint optimization initiatives, including $190 million associated with the closure of the Red River Mill.
Challenges in Economic Environment
The company highlighted external challenges, including economic noise and the impact of consumer sentiment, as well as the uncertainty caused by trade discussions.
Company Guidance
During International Paper's first quarter 2025 earnings call, CEO Andy Silvernail outlined the company's strategic goals and financial targets, emphasizing the deployment of an 80/20 approach to drive transformation and profitable growth. The company aims to achieve nearly $800 million in run-rate quarterly EBITDA in the first half of the year, accelerating to $1.1 billion by Q4. Despite a challenging macroeconomic environment, with North American industry demand down 2% in Q1 and European markets soft, International Paper remains focused on controlling costs and driving commercial excellence. The company targets $1.9 billion in cost reductions by 2027 and anticipates $600 million in commercial improvement benefits by the end of 2025. The integration of DS Smith is expected to contribute $600 million to $700 million in synergies. With a strong emphasis on customer experience and cost competitiveness, the company is confident in delivering its earnings targets, provided current demand levels persist.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.
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.