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International Paper (IP) to Build a Corrugated Packaging Plant

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International Paper Company IP plans to build a state-of-the-art corrugated packaging facility in Atglen, PA, to expand its Industrial Packaging footprint in the northeastern United States. The facility will add around 150 team members.

The construction of the facility is set to start in first-quarter 2022. It is likely to be fully operational in first-quarter 2023.

International Paper continues to experience solid demand for corrugated and containerboard packaging in the Industrial Packaging segment, as it plays a critical role in supply chain to bring essential products to consumers. The booming e-commerce market and consumer-oriented markets will continue to support the demand in the near term.

However, Industrial Packaging and Global Cellulose Fibers businesses volumes are impacted by stretched supply chains. International Paper expects higher maintenance outage costs as well as escalating recovered fiber, energy, chemicals, wood and distribution costs to dent results in the near term.

Mergers and acquisitions are a key strategy for International Paper to strengthen its packaging business. In North America, the company envisions a large opportunity within its industrial packaging businesses, which continue to generate the best margins in the industry. The company is taking initiatives to expand margin over time across the business. The company’s spin-off of the Printing Papers segment will enable it to focus on the Industrial Packaging segment, and capitalize on the growing demand for corrugated packaging, cut costs and improve earnings.

International Paper continually evaluates its operations for improvement opportunities by focusing on its core businesses, realigning capacity to operate fewer facilities with the same revenue capability, closing high-cost facilities and trimming costs. The company has strategically offloaded businesses in China to focus more on its U.S. operations. It believes that it could cater to the Chinese and Asian markets more effectively by supplying globally competitive products, primarily through its Ilim joint venture in Russia and through exports from the United States and other parts of the world.

Price Performance

International Paper’s shares have declined 3.6% in the past year compared with the industry’s growth of 5.8%.

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Zacks Investment Research

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Zacks Rank & Stocks to Consider

International Paper currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space are Olin Corporation OLN, Bunge Limited BG and Nucor Corporation NUE. While OLN and BG flaunt a Zacks Rank #1 (Strong Buy), NUE carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olin’s third-quarter 2021 adjusted earnings beat the Zacks Consensus Estimate, while revenues missed the same. It has an expected earnings growth rate of around 740% for the current fiscal year. The Zacks Consensus Estimate for current-year earnings has been revised 20.5% upward in the past 60 days.

Olin’s shares have surged 229% in the past year. The company has a long-term earnings growth of 56%.

Bunge’s third-quarter 2021 earnings and sales beat the respective Zacks Consensus Estimate. It has a trailing four-quarter earnings surprise of 105.7%, on average. The company has an estimated earnings growth rate of around 45% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 36%.

Bunge’s shares have appreciated 60% in the past year. It has a long-term earnings growth of 6.7%.

Nucor’s third-quarter adjusted earnings missed the Zacks Consensus Estimate, while sales beat the same. NUE has a trailing four-quarter earnings surprise of 2.74%, on average.

Nucor has a projected earnings growth rate of around 583% for 2021. The Zacks Consensus Estimate for current-year earnings has been revised upward by 18.1% in the past 60 days. The company’s shares have soared 128% in a year.


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