Back to top

Image: Bigstock

What's in Store for International Paper's (IP) Q2 Earnings?

Read MoreHide Full Article

International Paper Company (IP - Free Report) is scheduled to report second-quarter 2021 results, before the opening bell on Jul 29.

Q2 Estimates

The Zacks Consensus Estimate for International Paper’s quarterly earnings is currently pegged at $1.05, indicating year-over-year growth of 36.4%. Moreover, the Zacks Consensus Estimate for total sales is pinned at $5.60 billion for the to-be-reported quarter, suggesting an increase of 15.1%, year on year. The estimate has remained unchanged over the past 30 days.

Q1 Performance

In the last reported quarter, International Paper’s earnings and revenues beat the respective Zacks Consensus Estimate. Both bottom- and top-line figures also increased year over year. The company has a trailing four-quarter average earnings surprise of 42.1%.

Factors to Note

International Paper’s products are essential to produce and deliver food, pharmaceuticals, hygiene products and emergency supplies for consumers globally. Additionally, the coronavirus pandemic has been fueling e-commerce growth as consumer demand for online grocery, beverage and pharmaceuticals delivery services has skyrocketed following the pandemic-induced containment measures imposed by governments globally. These factors will likely reflect on International Paper’s second-quarter top-line figure.

The Zacks Consensus Estimate for the Industrial Packaging segment’s revenues is currently pegged at $3,987 million compared with the prior-year quarter’s $3,633 million. Solid demand for corrugated and containerboard packaging is likely to have benefited the segment’s sales performance. The segment’s operating profit for the quarter is projected to decline 2.8% year on year to $436 million. Surging input costs on the escalating recovered fiber, seasonal energy, chemicals and distribution costs, as well as higher planned maintenance outage expenses, might have hurt the segment’s margins during the June-end quarter.

The Zacks Consensus Estimate for the Printing Papers segment revenues is pegged at $841 million, suggesting growth of 44.2% from the year-earlier period. Demand for printing papers is improving after seeing pandemic-related declines last year. However, the company has also been witnessing unprecedented decline in commercial printing segments due to the significant pullback in print advertising. This segment is expected to report a quarterly operating profit of $72 million as against the prior-year quarter’s operating loss of $11 million.

The Global Cellulose Fibers business is benefiting from solid consumer demand for absorbent hygiene and pulp products. The Zacks Consensus Estimate for the segment’s revenues is pegged at $716 million for the quarter to be reported, calling for an improvement of 18.3% from the year-ago period. Nevertheless, mounting maintenance outage costs and operational costs might have eroded the segment’s performance during the period under review. This segment is likely to report an operating profit of $18.55 million for the second quarter as against the operating loss of $10 million incurred in the prior-year period.

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for International Paper this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for International Paper is -0.63%.

Zacks Rank: International Paper currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price Performance

Shares of International Paper have gained 64.6% over the past year, outperforming the industry's growth of 60.6%.

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows that these have the right combination of elements to post earnings beat this quarter:

LyondellBasell Industries N.V. (LYB - Free Report) has an Earnings ESP of +6.99% and sports a Zacks Rank of 1, at present.

Westlake Chemical Corporation (WLK - Free Report) , currently a Zacks #2 Ranked stock, has an Earnings ESP of +1.50%.

Eastman Chemical Company (EMN - Free Report) has an Earnings ESP of +0.90% and carries a Zacks Rank #3, currently.