International Paper (IP) to Post Q3 Earnings: What's in Store?
International Paper Company IP is scheduled to report third-quarter 2023 results, before the opening bell, on Oct 26.
Q3 Estimates
The Zacks Consensus Estimate for IP’s third-quarter sales is pegged at $4.85 billion, suggesting a 10.2% fall from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at 59 cents per share, indicating a year-over-year slump of 41.6%. Earnings estimates have moved down 3% in the past 60 days.
International Paper Company Price and EPS Surprise
International Paper Company price-eps-surprise | International Paper Company Quote
Q2 Performance
In the last reported quarter, International Paper witnessed a year-over-year decline in earnings due to lower revenues. The bottom line beat the Zacks Consensus Estimate, while the top line missed the same.
The company has an average trailing four-quarter earnings surprise of 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 third 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 2,416 thousand short tons for the third quarter, which marks a 4.2% year-over-year decline. Our estimate for containerboard volumes is 608 thousand short tons, which represents a year-over-year drop of 10.2%.
The Industrial Packaging segment is likely to witness year-over-year declines in volumes in recycling (1.2%), Saturated Kraft (12%) and Gypsum /Release Kraft (3.5%). EMEA Packaging is expected to increase 5.7%. Overall, volumes for the Industrial Packaging segment are projected to be 3,986 thousand short tons, which indicates a 4.2% decline from the prior-year quarter’s actual.
We expect average realized pricing for the Industrial Packaging segment to be 5.9% lower year over year. Lower prices and volumes are likely to have led to a 9.8% decline in the Industrial Packaging segment’s third-quarter revenues to $3,956 million. The segment’s margin is likely to have been hurt by higher operating and distribution costs due to the inflationary scenario, as well as a higher maintenance outage during the quarter. Per our model, the segment’s operating profit for the quarter is projected to plunge 12% year over year to $324.7 million.
The Global Cellulose Fibers business has been witnessing solid consumer demand for absorbent pulp products. However, lower price and mix will impact the segment’s volumes in the to-be-reported quarter. We expect the segment’s volumes at 679 thousand metric tons, indicating a 9.5% year-over-year dip. Pricing is expected to decline 7.2% year over year.
The segment’s third-quarter revenues, per our model, is $745 million, suggesting a decline of 16% from the year-ago quarter’s reported level. The estimate for the segment’s operating profit is $28.2 million, which indicates a 70.3% decline from the prior-year actual.
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 -2.54%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy)
Price Performance
Shares of International Paper have gained 2.1% in the past year compared with the industry's 7.2% growth.
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Stocks to Consider
Here are some stocks with the right combination of elements to post an earnings beat in their upcoming releases.
Kinross Gold Corporation KGC, scheduled to release third-quarter earnings on Nov 8, has an Earnings ESP of +8.70% and it currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Kinross Gold’s earnings for the third quarter is pegged at 9 cents per share. Earnings estimates have been unchanged in the past 60 days. It has an average trailing four-quarter earnings surprise of 31.7%.
SilverCrest Metals Inc. SILV, expected to release earnings on Nov 8, has an Earnings ESP of +17.24% and a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for SILV’s earnings for the third quarter is pegged at 15 cents per share. The consensus estimate for 2023 earnings has moved 25% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 239%.
Avient Corporation AVNT, scheduled to release earnings on Nov 2, currently has an Earnings ESP of +2.59% and a Zacks Rank of 3.
The Zacks Consensus Estimate for AVNT’s earnings for the third quarter is pegged at 57 cents per share. The consensus estimate for 2023 earnings has been unchanged in the past 60 days. It has an average trailing four-quarter earnings surprise of 11.1%.
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International Paper Company (IP) : Free Stock Analysis Report
Kinross Gold Corporation (KGC) : Free Stock Analysis Report
SilverCrest Metals Inc. (SILV) : Free Stock Analysis Report
Avient Corporation (AVNT) : Free Stock Analysis Report
