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International Paper (IP) to Post Q4 Earnings: What to Expect?

Zacks Equity Research

International Paper Company IP is scheduled to report fourth-quarter 2019 results, before the opening bell on Jan 30.

Q4 Estimates

The Zacks Consensus Estimate for International Paper’s fourth-quarter earnings is currently pegged at $1.02, indicating a decline of 38% from the year-ago quarter. Moreover, the Zacks Consensus Estimate for total sales stands at $5.58 billion for the December-end quarter, suggesting decline of 6% from the year-ago reported figure.

Q3 Performance

In the last reported quarter, International Paper’s earnings surpassed the Zacks Consensus Estimate, while sales had missed the same. Both earnings and revenues declined year over year.  Notably, International Paper has beat estimates in the trailing four quarters by 11.8%, on average.

International Paper Company Price and EPS Surprise

 

International Paper Company Price and EPS Surprise

International Paper Company price-eps-surprise | International Paper Company Quote

Factors Influencing Segment Performance

The Industrial Packaging segment has been facing structural challenges thanks to the impact of tariffs and a strong U.S. dollar in addition to weaker demand due to the recession in Turkey, which is a major importer of U.S. containerboard. Notably, price and mix is likely to have weighed on the fourth-quarter earnings, due to impact of prior index movement in North America and export pressure. Operations and costs are anticipated to affect earnings by $15 million.

The Zacks Consensus Estimate for the Industrial Packaging segment’s revenues is currently pegged at $3,800 million, suggesting a decline of 5 % year over year. The segment’s operating profit for the quarter is projected to decline 17% year over year to $537 million.

The Zacks Consensus Estimate for the Printing Papers segment revenues is $1,090 million, indicating a decline of 6% from the prior-year quarter. The segment’s operating profit is projected at $122 million for the October-December quarter, indicating a slump of 36% from the prior-year quarter. In the Printing Papers business, unfavorable price and mix are likely to have impacted earnings in the to-be-reported quarter, primarily in North American and Latin American business. Moreover, operations and costs are likely to reflect on the segment’s earnings thanks to the higher seasonal energy consumption across the papers portfolio.

In the Global Cellulose Fibers business, bleached softwood kraft and global pulp demand has remained strong. Product introductions in the fluff pulp segment and the company’s optimization initiatives are anticipated to have benefited the fourth-quarter performance.

The Zacks Consensus Estimate for the segment’s revenues is pegged at $597 million for the quarter to be reported, suggesting a decline of 19% from the year-ago quarter. However, this segment is expected to incur an operating loss of $26.9 million in the fourth quarter against the operating income of $91 million in the prior-year quarter. Additionally, elevated operational costs, and reduced price and mix on account of trade uncertainties are likely to have limited the segment’s earnings in the to-be-reported quarter.

Moreover, rising input costs and distribution costs are likely to have dampened margins in the fourth quarter.

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for International Paper this season. 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 to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for International Paper is -1.37%.
 
Zacks Rank: International Paper currently carries a Zacks Rank of 3.

Price Performance

Shares of International Paper have lost 3.5% in the past year compared with the industry's decline of 16.8%.

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows that they have the right combination of elements to post earnings beat this quarter:

Bunge Limited BG has an Earnings ESP of +18.18% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cleveland-Cliffs Inc. CLF has an Earnings ESP of +6.25% and a Zacks Rank #2.

LyondellBasell Industries N.V. LYB has an Earnings ESP of +2.83% and a Zacks Rank #3.

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LyondellBasell Industries N.V. (LYB) : Free Stock Analysis Report
 
Cleveland-Cliffs Inc. (CLF) : Free Stock Analysis Report
 
International Paper Company (IP) : Free Stock Analysis Report
 
Bunge Limited (BG) : Free Stock Analysis Report
 
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