International Paper Company ( IP Quick Quote IP - Free Report) is scheduled to report second-quarter 2023 results, before the opening bell, on Jul 27. Q2 Estimates
The Zacks Consensus Estimate for IP’s second-quarter sales is pegged at $4.94 billion, suggesting an 8.4% fall from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at 42 cents per share, indicating a year-over-year slump of 66%. Earnings estimates have moved down 2% in the past 60 days.
In the last reported quarter, International Paper witnessed year-over-year improvement in earnings despite lower revenues. The company however beat the Zacks Consensus Estimate on both the metrics.
The company has surpassed the consensus estimate for earnings in three quarters, while missing in one quarter, the average surprise being 7.4%.
Factors to Note
International Paper has been witnessing weak packaging demand recently, as the current inflationary pressures have weighed on consumers, leading to lower demand for goods. This had a great impact on packaging demand, as consumer priorities have shifted toward non-discretionary goods and services.
The company’s customers and the broader retail channel have also been trying to lower their elevated inventories. This has led to year-over-year declines in corrugating packaging and containerboard volumes over the past few quarters. As there has been no major improvement in the second quarter of 2023, the Industrial Packaging segment’s volumes are expected to bear the brunt of the weakness in the industry in the to-be-reported quarter.
We expect corrugating packaging volumes at around 2,318 thousand short tons for the second quarter, which marks a 11.5% decline year over year. Our estimate for containerboard volumes is 628.1 thousand short tons, which represents a year-over-year drop of 11.2%.
The Industrial Packaging segment is likely to witness year-over-year drop in volumes in recycling (1.3%), Saturated Kraft (14%) and EMEA Packaging (11.1%) as well. Overall, the volumes for the Industrial Packaging segment are 3,897.3 thousand short tons, which highlights a 10% decline from the last year quarter.
We expect average realized pricing for the Industrial Packaging segment to be 0.5% lower year over year. Lower prices and volumes are likely to have led to a 10% decline in the Industrial Packaging segment’s second-quarter revenues to $4,023 million. The segment’s margin is likely to have been hurt by higher operating and distribution costs due to the inflationary scenario as well a higher maintenance outage during the quarter. Per our model, the segment’s operating profit for the quarter is projected to plunge 52% year over year to $271.5 million.
The Global Cellulose Fibers business has been witnessing solid consumer demand for absorbent pulp products. The segment’s volumes are expected to have been higher than the first quarter reflecting seasonal trends. We expect the segment’s volumes at 756 thousand metric tons, indicating 5% year-over-year growth. Pricing is expected to decline 0.8% year over year.
The segment’s second-quarter revenues, per our model, is $821 million, suggesting an improvement of 4% from the year-ago quarter’s reported levels. The estimate for the segment’s operating profit is $14.4 million, which indicates a 42.6% decline from the last year. However, it is an improvement from the loss of $16 million in the first quarter due to the easing of supply-chain issues.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for International Paper this time around. 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 before they’re reported with our Earnings ESP Filter. Earnings ESP: International Paper has an Earnings ESP of +2.40%. Zacks Rank: The company currently carries a Zacks Rank #5 (Strong Sell). Price Performance
Shares of International Paper have slumped 27% in the past year compared with the
industry's 15% fall.
Image Source: Zacks Investment Research Stocks to Consider
Here are some companies in the basic materials space, which according to our model, have the right combination of elements to post an earnings beat this quarter:
ATI Inc. ( ATI Quick Quote ATI - Free Report) is scheduled to release second-quarter 2023 earnings on Aug 2. The company has an Earnings ESP of +1.08% and a Zacks Rank of 2. You can see . the complete list of today’s Zacks #1 Rank stocks here The Zacks Consensus Estimate for ATI’s second-quarter earnings has moved up 2% in the past 60 days. The consensus estimate for the company’s earnings for the quarter is pegged at 55 cents per share, which indicates year-over-year growth of 1.9%. The company has an average surprise of 13% in the trailing four quarters. Axalta Coating Systems Ltd. ( AXTA Quick Quote AXTA - Free Report) , which is slated to release its earnings on Aug 1, has an Earnings ESP of +6.02%. It currently carries a Zacks Rank of 2.
The consensus estimate for AXTA’s earnings for the second quarter is currently pegged at 39 cents per share. The estimate has remained unchanged over the past 60 days. AXTA has an average surprise of 5.2% in the trailing four quarters.
Agnico Eagle Mines Limited ( AEM Quick Quote AEM - Free Report) , which is scheduled to release earnings on Jul 26, has an Earnings ESP of +3.84% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Agnico Eagle’s second-quarter earnings is pegged at 55 cents per share. The estimate has moved up 10% over the past 60 days. The consensus mark suggests a year-over-year decline of 26.7%. AEM has an average surprise of 17.9% in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.