Bear of the Day: International Paper (IP)
International Paper (IP) is a global producer of paper, packaging, and more. International Paper is coming off two strong years of revenue growth.
International Paper shares have, however, tumbled over the past two years after getting overheated. Wall Street also sold IP stock as its outlook for earnings began to fade further and further.
What’s Going On with IP?
International Paper is a global producer of packaging, pulp, and other fiber-based products. The company also boasts that it is one of the largest recyclers in North America. And as its name suggests, IP operates around various parts of the world, with manufacturing in North America, Latin America, North Africa, and Europe.
International Paper’s packaging unit includes corrugated, bulk, solid fiber, retail packaging & display, and more. IP’s paper segment features containerboard and beyond, with a pulp segment that includes fluff, papergrade, and more. International Paper also has an expansive recycling unit, alongside various packaging services from printing and testing to graphic and structural design.
International Paper’s revenue climbed roughly 9% in 2022 after it jumped by 10% in 2021. Zacks estimates call for IP’s revenue to slip by 6% in FY23 and another 3% next year.
On top of that, IP’s adjusted earnings are projected to slide by 26% YoY this year and then slip another 9% lower in FY24 to hit $2.14 a share.
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International Paper’s projected downturn comes amid a wider global economic slowdown and a difficult to compete against stretch of growth during the post-covid boom. IP’s CEO noted in prepared Q1 remarks that it is "navigating a challenging and dynamic macro environment."
Bottom Line
Unfortunately, Wall Street has continued to be disappointed by International Paper’s guidance. IP’s FY23 Zacks consensus earnings outlook is down 19% in the last two months, with FY24’s figure about 20% lower. These downward estimate revisions help it land a Zacks Rank #5 (Strong Sell) right now.
The nearby chart also showcases that International Paper’s rough earnings outlook has continued to get worse over the last year-plus. IP shares are now down around 50% over the last two years. The paper company has also seen its stock price drop by 45% in the past five years.
IP stock is trading below both its 50-day and 200-day moving averages. Some investors might want to think about trying to call a bottom. But it might be best for investors who think highly of International Paper to wait for it to start showing signs of life instead of trying to catch a falling knife.
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International Paper Company (IP): Free Stock Analysis Report
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