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International Paper (IP) Q4 Earnings Top, Sales Lag Estimates
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International Paper Company (IP - Free Report) reported fourth-quarter 2019 adjusted earnings of $1.09 per share, down 34% year over year. However, the bottom line outpaced the Zacks Consensus Estimate of $1.02.
Including one-time items, earnings during the fourth quarter came in at 42 cents compared with the year-ago quarter figure of 78 cents.
Net sales declined to $5,498 million in the reported quarter from $5,951 million in the year-ago quarter. Further, the reported figure missed the Zacks Consensus Estimate of $5,576 million.
Adjusted cost of sales was $3,620 million, down from the $3,795 million in the prior-year quarter. Gross profit declined 13% year over year to $1,878 million. Selling and administrative expenses declined 0.9% year over year to $442 million in the quarter. Adjusted operating earnings came in at $669 million, reflecting a year-over-year decline of 29%.
International Paper Company Price, Consensus and EPS Surprise
Industrial Packaging: Sales in this segment fell to $3,810 million in the reported quarter from $4,017 million in the year-earlier quarter. Adjusted operating profit declined 6% year over year to $605 million.
Printing Papers: This segment’s sales were $1,067 million in the fourth quarter, down 8% from $1,160 million in the prior-year quarter. Adjusted operating profit for the segment was $109 million compared with $197 million in the year-ago period.
Global Cellulose Fibers: Sales of this segment came in at $577 million compared with $736 million in the prior-year quarter. The segment reported adjusted operating loss of $45 million in fourth-quarter 2019 against an operating profit of $93 million in the year-ago period.
Balance Sheet
Cash and temporary investments aggregated $511 million at the end of 2019 compared with $589 million at the end of the 2018. As of the 2019 end, long-term debt was $9.6 billion compared with $10.0 billion as of Dec 31, 2018.
Cash flow from operating activities was $3.6 billion in 2019 compared with $3.2 billion generated in the prior year. Free cash flow was $2.3 billion during 2019 compared with $1.7 billion last year.
The company continues to strengthen packaging business through targeted investments. It is also prudently managing costs, capital spending and working capital to generate strong cash flows in 2020, despite earnings headwinds.
International Paper repurchased shares worth $485 million during 2019 and paid dividends worth $796 million.
2019 Results
International Paper reported adjusted earnings per share of $4.43 in 2019, down 17% from the prior-year figure of $5.32. The bottom line surpassed the Zacks Consensus Estimate of $4.37. Including one-time items, earnings came in at $3.07, declining 37% from $4.85 reported in 2018.
Sales declined 4% year over year to $22.4 billion from the prior-year figure of $23.3 billion. However, the top line outpaced the Zacks Consensus Estimate of $22.5 billion.
Price Performance
International Paper’s shares have lost 8.5% over the past year compared with the industry’s decline of 19.9%.
Zacks Rank & Key Picks
International Paper currently carries a Zacks Rank #3 (Hold).
Daqo New Energy has projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied roughly 33% in a year’s time.
Royal Gold has estimated earnings growth rate of 83.5% for fiscal 2020. The company’s shares have appreciated roughly 30% in a year’s time.
Pretium Resources has projected earnings growth rate of 106.9% for 2020. The company’s shares have surged around 40% over a year.
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International Paper (IP) Q4 Earnings Top, Sales Lag Estimates
International Paper Company (IP - Free Report) reported fourth-quarter 2019 adjusted earnings of $1.09 per share, down 34% year over year. However, the bottom line outpaced the Zacks Consensus Estimate of $1.02.
Including one-time items, earnings during the fourth quarter came in at 42 cents compared with the year-ago quarter figure of 78 cents.
Net sales declined to $5,498 million in the reported quarter from $5,951 million in the year-ago quarter. Further, the reported figure missed the Zacks Consensus Estimate of $5,576 million.
Adjusted cost of sales was $3,620 million, down from the $3,795 million in the prior-year quarter. Gross profit declined 13% year over year to $1,878 million. Selling and administrative expenses declined 0.9% year over year to $442 million in the quarter. Adjusted operating earnings came in at $669 million, reflecting a year-over-year decline of 29%.
International Paper Company Price, Consensus and EPS Surprise
International Paper Company price-consensus-eps-surprise-chart | International Paper Company Quote
Segment Performance
Industrial Packaging: Sales in this segment fell to $3,810 million in the reported quarter from $4,017 million in the year-earlier quarter. Adjusted operating profit declined 6% year over year to $605 million.
Printing Papers: This segment’s sales were $1,067 million in the fourth quarter, down 8% from $1,160 million in the prior-year quarter. Adjusted operating profit for the segment was $109 million compared with $197 million in the year-ago period.
Global Cellulose Fibers: Sales of this segment came in at $577 million compared with $736 million in the prior-year quarter. The segment reported adjusted operating loss of $45 million in fourth-quarter 2019 against an operating profit of $93 million in the year-ago period.
Balance Sheet
Cash and temporary investments aggregated $511 million at the end of 2019 compared with $589 million at the end of the 2018. As of the 2019 end, long-term debt was $9.6 billion compared with $10.0 billion as of Dec 31, 2018.
Cash flow from operating activities was $3.6 billion in 2019 compared with $3.2 billion generated in the prior year. Free cash flow was $2.3 billion during 2019 compared with $1.7 billion last year.
The company continues to strengthen packaging business through targeted investments. It is also prudently managing costs, capital spending and working capital to generate strong cash flows in 2020, despite earnings headwinds.
International Paper repurchased shares worth $485 million during 2019 and paid dividends worth $796 million.
2019 Results
International Paper reported adjusted earnings per share of $4.43 in 2019, down 17% from the prior-year figure of $5.32. The bottom line surpassed the Zacks Consensus Estimate of $4.37. Including one-time items, earnings came in at $3.07, declining 37% from $4.85 reported in 2018.
Sales declined 4% year over year to $22.4 billion from the prior-year figure of $23.3 billion. However, the top line outpaced the Zacks Consensus Estimate of $22.5 billion.
Price Performance
International Paper’s shares have lost 8.5% over the past year compared with the industry’s decline of 19.9%.
Zacks Rank & Key Picks
International Paper currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Daqo New Energy Corp. (DQ - Free Report) , Royal Gold, Inc. (RGLD - Free Report) and Pretium Resources Inc. , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Daqo New Energy has projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied roughly 33% in a year’s time.
Royal Gold has estimated earnings growth rate of 83.5% for fiscal 2020. The company’s shares have appreciated roughly 30% in a year’s time.
Pretium Resources has projected earnings growth rate of 106.9% for 2020. The company’s shares have surged around 40% over a year.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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