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International Paper (IP) Q3 Earnings & Sales Miss Estimates

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International Paper Company IP reported third-quarter 2021 adjusted earnings of $1.35 per share, which missed the Zacks Consensus Estimate of $1.46. However, the bottom line improved 90% year over year driven by higher average sales prices in all of its segments, which helped offset the impact of higher input costs.

Including one-time items, the company posted earnings per share of $2.20 in third-quarter 2021 that included a gain of 89 cents per share related to the sale of its Kwidzyn, Poland mill. The company had reported earnings per share of 52 cents in the year-ago quarter.

Net sales were $5.71 billion in the quarter under review compared with the year-ago quarter’s $5.12 billion. The top line missed the Zacks Consensus Estimate of $5.84 billion.

Adjusted cost of sales was $3,910 million in the third quarter, up 10.6% from the prior-year quarter’s $3,534 million. Adjusted gross profit increased 13.5% year over year to $1,804 million. Adjusted selling and administrative expenses increased 4% year over year to $379 million in the reported quarter. Adjusted operating profit was $532 million, reflecting year-over-year growth of 90% from $280 million in the year-ago quarter.

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 $4.09 billion compared with the prior-year quarter’s $3.8 billion. Operating profit fell 9% year over year to $429 million.

Global Cellulose Fibers: The segment’s sales climbed 29% year over year to reach $729 million in the third quarter. The segment reported an operating profit of $96 million in the quarter, against the year-ago quarter’s loss of $59 million.

Printing Papers: Sales of this segment amounted to $846 million, reflecting growth of 14% from the year-earlier quarter. The segment operating profit was $106 million, indicating an improvement of 68% year over year.

Financial Position

Cash and temporary investments aggregated $2,122 million as of Sep 30, 2021 compared with $595 million as of Dec 31, 2020. In the quarter under review, the company repurchased shares worth $212 million. At the end of the third quarter, the company’s long-term debt was at around $8.2 billion, up from $8 billion as of 2020 end. Cash flow from operating activities was $1.9 billion in the first nine-month period of 2021 compared with $2.3 billion in the prior-year comparable period.

International Paper expects demand to remain strong in the fourth quarter. Margins will expand as prior price hikes are expected to counter higher input and transportation costs. However, the company anticipates the ongoing supply chain challenges to persist.

Price Performance

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Zacks Investment Research

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International Paper’s shares have gained 19.6% in the past year, compared with the industry’s rally of 30.8%.

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, Olin Corporation OLN and Nutrien Ltd. NTR. All of these stocks currently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nucor has a projected earnings growth rate of around 580% for the current year. The company’s shares have soared 131% in a year.

Olin has an expected earnings growth rate of around 689% for the current fiscal. The company’s shares have surged 249% in the past year.

Nutrien has an expected earnings growth rate of around 180% for the current year. The company’s shares have gained 74% in the past year.


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International Paper Company (IP) : Free Stock Analysis Report

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Olin Corporation (OLN) : Free Stock Analysis Report

Nutrien Ltd. (NTR) : Free Stock Analysis Report

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