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International Paper (IP) Earnings & Sales Top Estimates in Q4

Zacks Equity Research

International Paper Company IP delivered fourth-quarter 2018 adjusted earnings of $1.65 per share, improving from the year-ago quarter’s $1.27. The bottom line outpaced the Zacks Consensus Estimate of $1.61.

Including one-time items, earnings in the fourth quarter came in at 78 cents compared with $3.50 in the year-ago quarter.
 
Net sales improved to $5,951 million in the reported quarter from $5,711 million in the year-ago quarter, comfortably surpassing the Zacks Consensus Estimate of $5,856 million.

Adjusted cost of sales increased 3% year over year to $3,801 million in the fourth quarter. Adjusted gross profit was $2,150 million, up 7% the prior-year quarter. Selling and administrative expenses dropped 1% year over year to $446 million in the quarter. Adjusted operating earnings of $670 million indicated a year-over-year improvement of 26%.

 

International Paper Company Price, Consensus and EPS Surprise

 

International Paper Company Price, Consensus and EPS Surprise | International Paper Company Quote

Segment Performance

Industrial Packaging: Sales at this segment increased to $4,017 million from $3,893 million in the year-ago period. Adjusted operating profit improved to $646 million from $614 million a year ago.

Printing Papers: Sales at this segment were $1,160 million in the reported quarter, up 4.8% from $1,106 million in the year-earlier quarter.
Adjusted operating profit for the segment was $197 million compared with $136 million in the year-ago quarter.
 
Global Cellulose Fibers: Sales at this segment were $736 million compared with $721 million in the prior-year quarter. The segment’s adjusted operating profit declined to $93 million from $98 million in the year-ago quarter.

Balance Sheet
 
As of Dec 31, 2018, cash and temporary investments aggregated $589 million compared with $1,018 million as of Dec 31, 2017. Long-term debt was $10,015 million as of Dec 31, 2018, compared with $10,846 million as of Dec 31, 2017.
 
Cash flow from operating activities for the 12-month period of fiscal 2018 was $3,226 million compared with $1,757 million in the prior-year period. Free cash flow for the 12-month period of fiscal 2018 was $1,654 million compared with $1,970 million in the prior-year period.

2018 Results

International Paper reported adjusted earnings per share of $5.32 in 2018, up 52% from $3.49 in the prior year. Earnings beat the Zacks Consensus Estimate of $5.30.
 
Sales increased 7.4% year over year to $23.3 billion from $21.7 billion in 2017. The top line beat the Zacks Consensus Estimate of $23.2 billion.

Outlook

International Paper returned $1.5 billion to shareholders through dividends and share repurchases during the fourth quarter. The company expects to generate strong returns and cash flow growth to create shareholders value in 2019.

International Paper’s shares have lost 23.3% over the past year compared with the industry’s decline of 34.1%.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the basic materials space are Ingevity Corporation NGVT, Israel Chemicals Ltd. ICL and Quaker Chemical Corporation KWR.
 
Ingevity’s shares have gained 28.2% in the past year and flaunts a Zacks Rank #1 (Strong Buy). The company has an expected earnings growth rate of 21.5% for 2019. You can see the complete list of today’s Zacks #1 Rank stocks here.

Israel Chemicals has an expected earnings growth rate of 2.7% for 2019 and carries a Zacks Rank #2 (Buy). The stock has rallied 42.2% in a year.

Quaker Chemical has an expected earnings growth rate of 20.5% for 2019 and carries a Zacks Rank #2. Its shares have gained 32.2% in a year.

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