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International Paper (IP) Q2 Earnings Beat Estimates, Up Y/Y

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International Paper Company IP reported second-quarter 2021 adjusted earnings of $1.06 per share, which beat the Zacks Consensus Estimate of $1.05. The bottom line improved 38% year over year

Including one-time items, the company posted earnings per share of $1.09 in second-quarter 2021 compared with 67 cents reported in the year-ago quarter.

Net sales were $5.62 billion in the second quarter compared with the year-ago quarter’s $4.87 billion. The top line surpassed the Zacks Consensus Estimate of $5.60 billion.

Cost of sales was $3,913 million in the quarter under review, up 14.2% from the prior-year quarter’s $3,427 million. Gross profit increased 18.3% year over year to $1,703 million. Selling and administrative expenses surged 39% year over year to $460 million during the reported quarter. Adjusted operating profit was $421 million, reflecting year-over-year growth of 41%.

International Paper Company Price, Consensus and EPS Surprise

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: The segment’s sales were $4.06 billion compared with the prior-year quarter’s $3.63 billion. Operating profit fell 9% year over year to $408 million.

Global Cellulose Fibers: The segment’s sales climbed 10.9% year over year to reach $671 million in the second quarter. The segment reported an operating profit of $10 million in second-quarter 2021, a turnaround performance from the year-ago quarter’s loss of $10 million.

Printing Papers: Sales of this segment amounted to $846 million, reflecting growth of 45% from the year-earlier quarter. The segment operating profit was $76 million against an operating loss of $11 million in the year-ago quarter.

Financial Position

Cash and temporary investments aggregated $706 million as of Jun 30, 2021 compared with $595 million as of Dec 31, 2020. In the second quarter, the company repurchased shares worth $57 million. At the end of the second quarter, the company’s long-term debt was at around $7.1 billion. Cash flow from operating activities was $1,278 million in the first six-month period of 2021 compared with $1,539 million in the prior-year comparable period.

International Paper expects demand to remain strong in the third quarter. Margins will expand as prior price movements are expected to counter higher input and transportation costs. Maintenance outages are expected to be lower in the third quarter compared to the heavily loaded second quarter. The company stated that it is progressing well on the spin-off of its papers business, which is expected to be completed on Oct 1, 2021.

Price Performance

International Paper’s shares have gained 59.2% in the past year, compared with the industry’s rally of 59.9%.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Nucor Corporation NUE, Cabot Corporation CBT and Dow Inc. DOW.

Nucor has a projected earnings growth rate of around 455.4% for the current year. The company’s shares have soared 130% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot has an expected earnings growth rate of around 137.5% for the current fiscal. The company’s shares have surged 40% in the past year. It currently flaunts a Zacks Rank #1.

Dow has an expected earnings growth rate of around 403% for the current year. The company’s shares have gained 42% in the past year. It currently carries a Zacks Rank #2 (Buy).


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International Paper Company (IP) : Free Stock Analysis Report

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