International Paper Company (IP - Free Report) reported second-quarter 2022 adjusted earnings of $1.24 share, beating the Zacks Consensus Estimate of $1.10 by 13%. The bottom line improved 51% year over year, driven by strong demand and higher sales in its segments and robust operational performance, which helped offset the impact of elevated input costs.
Including one-time items, the company posted earnings per share from continuing operations of $1.38 in second-quarter 2022 compared with 78 cents in the year-ago quarter.
Net sales were $5.39 billion in the quarter under review, up 13% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $5.31 billion.
Adjusted cost of sales was $3,785 million in the quarter under review, up 10% from the prior-year quarter’s $3,428 million. Adjusted gross profit increased 19% year over year to $1,604 million. Selling and administrative expenses were $300 million, which declined 26% from the adjusted figure of $403 million in the last year’s comparable quarter. Adjusted operating profit was $459 million, reflecting year-over-year growth of 41% from $325 million in the year-ago quarter.
The company realized earnings of $65 million from its Building a Better IP set of initiatives. This brings the year-to-date tally to $105 million.
Segment Performance
Industrial Packaging: The segment’s sales were $4.5 billion, up 11% year on year. Operating profit surged 44% year over year to $560 million.
Global Cellulose Fibers: The segment’s sales climbed 16% year over year to $788 million in the second quarter. The segment reported an operating profit of $25 million in the quarter, a solid improvement compared with the year-ago quarter’s $1 million.
Financial Position
Cash and temporary investments aggregated $826 million at the end of second-quarter 2022 compared with $1,295 million as of the end of 2021. In the second quarter, the company repurchased shares worth $395 million and paid dividends worth $170 million. At the end of the June-end quarter, its long-term debt was around $5.3 billion compared with $5.4 billion as of 2021-end. Cash flow from operating activities was $978 billion in the first half of 2022 compared with $1,278 million in the prior-year comparable period.
International Paper expects demand to remain strong in the third quarter. The company expects prior price movements to likely offset higher costs and boost margins.
Price Performance
International Paper’s shares have fallen 27.1% in the past year, compared with the industry’s decline of 21.4%.
Zacks Rank & Other Stocks to Consider
International Paper currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.
Some other top-ranked stocks worth considering in the basic materials space include Cabot Corporation (CBT - Free Report) , ATI Inc. (ATI - Free Report) and Albemarle Corporation (ALB - Free Report) .
Cabot, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 0.8% upward in the past 60 days.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.2%. CBT has gained around 32% over a year.
ATI, currently sporting a Zacks Rank #1, has a projected earnings growth rate of 1,069.2% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised upward by 12.5% in the past 60 days.
ATI’s earnings beat the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of roughly 128.9%, on average. ATI’s shares have appreciated around 19% in a year.
Albemarle has a projected earnings growth rate of 241.8% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 18% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 20%. ALB has gained roughly 20% in a year. The company flaunts a Zacks Rank #2.
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International Paper Company (IP - Free Report) reported second-quarter 2022 adjusted earnings of $1.24 share, beating the Zacks Consensus Estimate of $1.10 by 13%. The bottom line improved 51% year over year, driven by strong demand and higher sales in its segments and robust operational performance, which helped offset the impact of elevated input costs.
Including one-time items, the company posted earnings per share from continuing operations of $1.38 in second-quarter 2022 compared with 78 cents in the year-ago quarter.
Net sales were $5.39 billion in the quarter under review, up 13% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $5.31 billion.
Adjusted cost of sales was $3,785 million in the quarter under review, up 10% from the prior-year quarter’s $3,428 million. Adjusted gross profit increased 19% year over year to $1,604 million. Selling and administrative expenses were $300 million, which declined 26% from the adjusted figure of $403 million in the last year’s comparable quarter. Adjusted operating profit was $459 million, reflecting year-over-year growth of 41% from $325 million in the year-ago quarter.
The company realized earnings of $65 million from its Building a Better IP set of initiatives. This brings the year-to-date tally to $105 million.
Segment Performance
Industrial Packaging: The segment’s sales were $4.5 billion, up 11% year on year. Operating profit surged 44% year over year to $560 million.
Global Cellulose Fibers: The segment’s sales climbed 16% year over year to $788 million in the second quarter. The segment reported an operating profit of $25 million in the quarter, a solid improvement compared with the year-ago quarter’s $1 million.
Financial Position
Cash and temporary investments aggregated $826 million at the end of second-quarter 2022 compared with $1,295 million as of the end of 2021. In the second quarter, the company repurchased shares worth $395 million and paid dividends worth $170 million. At the end of the June-end quarter, its long-term debt was around $5.3 billion compared with $5.4 billion as of 2021-end. Cash flow from operating activities was $978 billion in the first half of 2022 compared with $1,278 million in the prior-year comparable period.
International Paper expects demand to remain strong in the third quarter. The company expects prior price movements to likely offset higher costs and boost margins.
Price Performance
International Paper’s shares have fallen 27.1% in the past year, compared with the industry’s decline of 21.4%.
Zacks Rank & Other Stocks to Consider
International Paper currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.
Some other top-ranked stocks worth considering in the basic materials space include Cabot Corporation (CBT - Free Report) , ATI Inc. (ATI - Free Report) and Albemarle Corporation (ALB - Free Report) .
Cabot, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 0.8% upward in the past 60 days.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.2%. CBT has gained around 32% over a year.
ATI, currently sporting a Zacks Rank #1, has a projected earnings growth rate of 1,069.2% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised upward by 12.5% in the past 60 days.
ATI’s earnings beat the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of roughly 128.9%, on average. ATI’s shares have appreciated around 19% in a year.
Albemarle has a projected earnings growth rate of 241.8% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 18% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 20%. ALB has gained roughly 20% in a year. The company flaunts a Zacks Rank #2.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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