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International Paper (IP) Q1 Earnings & Sales Top Estimates

Zacks Equity Research

International Paper Company IP reported first-quarter 2020 adjusted earnings of 57 cents per share, significantly down 49% year over year. However, the bottom line outpaced the Zacks Consensus Estimate of 43 cents.

Including one-time items, the company incurred net loss per share of 36 cents during the first quarter, as against the year-ago quarter’s reported earnings per share of $1.05.

Net sales declined to $5,352 million in the first quarter from the year-ago quarter’s $5,643 million. However, the reported figure beat the Zacks Consensus Estimate of $5,227 million.

Cost of sales was $3,746 million, down from the prior-year quarter’s $3,929 million. Gross profit declined 6.3% year over year to $1,606 million. Selling and administrative expenses flared up 1.2% year over year to $418 million in the March-end quarter. Segment operating profit came in at $512 million, reflecting a year-over-year decline of 15%.

International Paper Company Price, Consensus and EPS Surprise

International Paper Company Price, Consensus and EPS Surprise

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

Segment Performance

Industrial Packaging: Sales in this segment fell to $3,819 million in the first quarter from the year-earlier quarter’s $3,832 million. Operating profit increased 12% year over year to $470 million.

Printing Papers: This segment’s sales were $908 million in the January-March quarter, down 15% from the prior-year quarter’s $1,065 million. Operating profit for the segment was $96 million compared with the year-ago period’s $144 million.

Global Cellulose Fibers: Sales of this segment came in at $568 million compared with the $689 million witnessed in the prior-year quarter. The segment reported an operating loss of $54 million in first-quarter 2020 against an operating profit of $35 million posted in the year-ago period.

Balance Sheet

Cash and temporary investments aggregated $1,239 million as of Mar 31, 2020 compared with $511 million as of Dec 31, 2019. As of Mar 30, 2020, long-term debt was $9.5 billion compared with $9.6 billion as of Dec 31, 2019.

Cash flow from operating activities was $649 million in the March-end quarter compared with the $733 million generated in the year-earlier period. Free cash flow was $363 million in the reported quarter compared with the prior-year quarter’s $440 million.

The company is implementing prudent measures to strengthen its liquidity position to battle the coronavirus crisis.

Price Performance

International Paper’s shares have lost 22% over the past year compared with the industry’s decline of 29.6%.



Zacks Rank & Key Picks

International Paper currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Newmont Corporation NEM, Barrick Gold Corporation GOLD and Franco-Nevada Corporation FNV. While Newmont and Barrick Gold sport a Zacks Rank #1 (Strong Buy), Franco-Nevada carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Newmont has an expected earnings growth rate of 90.2% for 2020. The company’s shares have surged 103.6% in the past year.

Barrick Gold has an estimated earnings growth rate of 60.8% for the ongoing year. Its shares have soared 112.7% over the past year.    

Franco-Nevada has a projected earnings growth rate of 19.2% for the current year. The company’s shares have appreciated 92.5% in a year’s time.

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