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International Paper (IP - Free Report) is a Zacks Rank #1 (Strong Buy) the global leader in the paper and packaging industry. The company produces a wide range of paper products, including packaging materials, pulp, and paper.
The stock has started the year in the green, even after gaining almost 20% in Q4 of 2023.
A strong dividend, positive earnings, and some positive industry headlines have investors interested in the name again.
About the Company
International Paper was founded in 1898 and is headquartered in Memphis, Tennessee. The company has 39,000 full-time employees and has a market cap of $13 billion.
International Paper produces corrugated packaging products that protect and promote goods, which aid in worldwide commerce. It also provides pulp for diapers, tissue, and other personal care products that promote health and wellness.
The stock has a Zacks Style Score of “B” in Value and “C” in Momentum. It also posts a Style Score of “F” in Growth, but four straight earnings beats have investors interested in the stock again.
Q3 Earnings Beat and Job Cuts
In late October, IP reported Q3 EPS at $0.64 v $0.59 expected. Industrial packaging operating profit came in at $325M v the 304M last quarter and FCF was $240M v the $197M last year.
Management said they are seeing a continuing demand recovery across the portfolio. They added that they exceeded their full-year target and are focused on controlling costs.
This was the fourth straight earnings beat after a rough straight in 2021 and 2022.
The stock rallied after the earnings report but then chopped in a sideways manner until news hit that competitor Packaging Corp would be raising prices.
Packaging Corp Headlines
In late November, stocks across the sector started to surge higher. The reasoning was Packaging Corp (PKG - Free Report) announcing to customers that they would be raising the linerboard and semi-chemical medium prices.
This move allows the whole industry to be more competitive or simply follow suit, which will help margins and the bottom line.
Analyst Estimates
Since earnings, estimates have been mixed when looking at all time frames.
For the current quarter and year, estimates have been flat over the last 60 days, at $0.34 and $2.10 respectively.
However longer-term estimates are headed higher over that same time frame. For next year, estimates have moved from $1.88 to $2.01, or a jump of 7%.
As the industry hikes prices, investors should watch for these estimates to continue higher. As of now, the market thinks that this will be very positive for the stock as it is trading close to 52-week highs.
Additionally, investors can collect a 5% dividend while they wait for that earnings growth to return.
The Technicals
The stock is well off its 2021 high of $65. After bottoming out this summer under the $30 mark, IP is now trading at $37. This is above all moving averages and just below the $38 level which is 2024 highs.
For those looking for an entry, the 50-day moving average is $35.75 and the 200-day MA is $34.10. If the bulls can push the price above the $38 level, they can target a move toward $40.
Bottom Line
International Paper is a steady company with a low beta and a strong dividend. The recent price hikes in the industry secure this dividend and provide an opportunity for earnings growth.
While the stock might not beat Nvidia (NVDA - Free Report) in appreciation, it allows for some nice income in a volatile atmosphere.
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Bull of the Day: International Paper (IP)
International Paper (IP - Free Report) is a Zacks Rank #1 (Strong Buy) the global leader in the paper and packaging industry. The company produces a wide range of paper products, including packaging materials, pulp, and paper.
The stock has started the year in the green, even after gaining almost 20% in Q4 of 2023.
A strong dividend, positive earnings, and some positive industry headlines have investors interested in the name again.
About the Company
International Paper was founded in 1898 and is headquartered in Memphis, Tennessee. The company has 39,000 full-time employees and has a market cap of $13 billion.
International Paper produces corrugated packaging products that protect and promote goods, which aid in worldwide commerce. It also provides pulp for diapers, tissue, and other personal care products that promote health and wellness.
The stock has a Zacks Style Score of “B” in Value and “C” in Momentum. It also posts a Style Score of “F” in Growth, but four straight earnings beats have investors interested in the stock again.
Q3 Earnings Beat and Job Cuts
In late October, IP reported Q3 EPS at $0.64 v $0.59 expected. Industrial packaging operating profit came in at $325M v the 304M last quarter and FCF was $240M v the $197M last year.
Management said they are seeing a continuing demand recovery across the portfolio. They added that they exceeded their full-year target and are focused on controlling costs.
This was the fourth straight earnings beat after a rough straight in 2021 and 2022.
The stock rallied after the earnings report but then chopped in a sideways manner until news hit that competitor Packaging Corp would be raising prices.
Packaging Corp Headlines
In late November, stocks across the sector started to surge higher. The reasoning was Packaging Corp (PKG - Free Report) announcing to customers that they would be raising the linerboard and semi-chemical medium prices.
This move allows the whole industry to be more competitive or simply follow suit, which will help margins and the bottom line.
Analyst Estimates
Since earnings, estimates have been mixed when looking at all time frames.
For the current quarter and year, estimates have been flat over the last 60 days, at $0.34 and $2.10 respectively.
However longer-term estimates are headed higher over that same time frame. For next year, estimates have moved from $1.88 to $2.01, or a jump of 7%.
As the industry hikes prices, investors should watch for these estimates to continue higher. As of now, the market thinks that this will be very positive for the stock as it is trading close to 52-week highs.
Additionally, investors can collect a 5% dividend while they wait for that earnings growth to return.
The Technicals
The stock is well off its 2021 high of $65. After bottoming out this summer under the $30 mark, IP is now trading at $37. This is above all moving averages and just below the $38 level which is 2024 highs.
For those looking for an entry, the 50-day moving average is $35.75 and the 200-day MA is $34.10. If the bulls can push the price above the $38 level, they can target a move toward $40.
Bottom Line
International Paper is a steady company with a low beta and a strong dividend. The recent price hikes in the industry secure this dividend and provide an opportunity for earnings growth.
While the stock might not beat Nvidia (NVDA - Free Report) in appreciation, it allows for some nice income in a volatile atmosphere.