U.S. Markets closed

Is International Paper (IP) Stock Undervalued Right Now?

Zacks Equity Research
FMC (FMC) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is International Paper (IP). IP is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

We also note that IP holds a PEG ratio of 0.76. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. IP's industry has an average PEG of 0.87 right now. Within the past year, IP's PEG has been as high as 1.84 and as low as 0.75, with a median of 1.06.

Finally, we should also recognize that IP has a P/CF ratio of 3.77. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 4.55. Within the past 12 months, IP's P/CF has been as high as 10.50 and as low as 3.63, with a median of 5.36.

These are just a handful of the figures considered in International Paper's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that IP is an impressive value stock right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
International Paper Company (IP) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.