International Paper (IP) to Post Q4 Earnings: What to Expect
International Paper Company IP is scheduled to report fourth-quarter 2023 results, before the opening bell, on Feb 1.
Q4 Estimates
The Zacks Consensus Estimate for IP’s fourth-quarter sales is pegged at $4.68 billion, suggesting an 8.8% fall from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at 34 cents per share, indicating a year-over-year slump of 61%. Earnings estimates have remained unchanged in the past 30 days.
Q3 Performance
In the last reported quarter, International Paper witnessed a year-over-year decline in earnings due to lower revenues. While the top line missed the Zacks Consensus Estimate, the bottom line beat the same.
IP’s earnings have surpassed the consensus estimate in each of the last four trailing quarters, delivering an earnings surprise of 20.8%, on average.
International Paper Company Price and EPS Surprise
International Paper Company price-eps-surprise | International Paper Company Quote
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, leading to year-over-year declines in corrugating packaging and containerboard volumes over the past few quarters. We expect the inventory correction to have resumed normal levels in the fourth quarter of 2023. Our model thus projects a slight pickup in volumes, both sequentially and on a year-over-year basis.
We expect corrugating packaging volumes at 2,454 thousand short tons for the fourth quarter, which marks a 0.4% year-over-year rise. Our estimate for containerboard volumes is 600 thousand short tons, which represents year-over-year growth of 9.9%.
The Industrial Packaging segment is likely to have witnessed year-over-year growth in volumes in recycling (0.1%), Saturated Kraft (0.3%) and Gypsum /Release Kraft (0.2%). EMEA Packaging is expected to increase 0.1%.
Overall, volumes for the Industrial Packaging segment are projected to be 4,051 thousand short tons, which indicates 1.7% growth from the prior-year quarter’s actual.
However, the impact of higher volumes is expected to have been offset by lower prices in the quarter, owing to prior index movement in North America and lower average export prices. We expect average realized pricing for the Industrial Packaging segment to be 8.8% lower year over year. We expect a 7.2% year-over-year decline in the Industrial Packaging segment’s fourth-quarter revenues to $3,867 million due to lower prices. The segment’s margin is likely to have been hurt by higher input costs (particularly old corrugated container costs) as well as operating and distribution costs. Per our model, the segment’s operating profit for the quarter is projected to plunge 45% year over year to $229 million.
The Global Cellulose Fibers business has been witnessing solid consumer demand for absorbent pulp products. We expect the segment’s volumes at 714 thousand metric tons, indicating a 0.5% year-over-year rise. Pricing is expected to decline 18.9% year over year. However, lower prices and mix will impact the segment’s revenues in the to-be-reported quarter.
The segment’s fourth-quarter revenues, per our model, are estimated to be $686 million, suggesting a decline of 18.5% from the year-ago quarter’s reported level. The estimate for the segment’s operating profit is $7.3 million, which indicates a 79% decline from the prior-year actual owing to higher costs and maintenance outage expenses.
What the Zacks Model Unveils
Our model predicts 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. That is precisely 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 +1.74%.
Zacks Rank: The company currently sports a Zacks Rank of 1.
Price Performance
Shares of International Paper have dipped 0.6% in the past year against the industry's 6.4% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Here are some stocks with the right combination of elements to post an earnings beat in their upcoming releases.
Eldorado Gold EGO, scheduled to release fourth-quarter 2023 earnings on Feb 22, currently has an Earnings ESP of +3.28 % and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for EGO’s fourth-quarter earnings is pegged at 20 cents per share. The consensus estimate for the company’s quarterly earnings has moved up 25% in the past 30 days. It has an average trailing four-quarter earnings surprise of 496%.
Southern Copper Corporation SCCO, expected to release fourth-quarter 2023 earnings soon, presently has an Earnings ESP of +5.13% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Southern Copper’s fourth-quarter earnings has moved up 4% in the past 30 days. The consensus estimate for SCCO’s earnings for the quarter is pegged at 75 cents per share. It has an average trailing four-quarter earnings surprise of 11.1%.
Agnico Eagle Mines AEM, scheduled to release fourth-quarter 2023 earnings on Feb 15, currently has an Earnings ESP of +8.23% and a Zacks Rank of 3.
The consensus estimate for Agnico Eagle Mines’ earnings for the fourth quarter is pegged at 46 cents per share. Earnings estimates have moved 5% north in the past 30 days. It has an average trailing four-quarter earnings surprise of 9.9%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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International Paper Company (IP) : Free Stock Analysis Report
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
Southern Copper Corporation (SCCO) : Free Stock Analysis Report
Eldorado Gold Corporation (EGO) : Free Stock Analysis Report
