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Will International Paper (IP) Surprise This Earnings Season?

Zacks Equity Research

International Paper Company (IP) it is slated to report its first quarter 2014 results before the opening bell on Apr 30. In the last reported quarter, International Paper’s earnings comfortably beat the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.

Key Earnings Drivers

International Paper is focusing on acquisitions to complement its organic growth. Recently, International Paper purchased 25% remaining stake in its Brazilian joint venture, Orsa International Paper Embalagens S.A., from its collaboration partner for $135 million. With this deal, International Paper takes full ownership of three containerboard mills and four box plants. This investment strengthens the company’s focus on expanding its industrial packaging business globally in attractive markets.

International Paper is continuously repositioning its portfolio by selling timberland and non-core business lines and acquiring packaging assets such as Weyerhaeuser and Temple-Inland, which are likely to be accretive to the company in the long term.

Also, the company announced the spin-off of its struggling xpedx distribution business in order to further streamline its operations and generate profits. The spin-off is part of its corporate strategy to focus on legacy business of industrial and consumer packaging and printing papers segments.

Given the improving market fundamentals, we expect the company to post decent quarterly results this time.

Earnings Surprise

Our proven model shows that International Paper is likely to beat earnings since it has the appropriate combination of two key ingredients:

Positive Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.75%. This indicates a likely positive earnings surprise.

Zacks Rank #3 (Hold): Stocks with a Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and #5) should never be considered while going into an earnings announcement.

International Paper’s Zacks Rank #3 increases the predictive power of its ESP. The combination of its Zacks Rank and Earnings ESP makes us confident of a positive earnings surprise in the soon- to-be reported quarter.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter.

ADT Corporation (ADT) has an Earnings ESP of +4.55% and a Zacks Rank #3 (Hold).

Mobile Mini, Inc (MINI) has an Earnings ESP of +5.26 % and a Zacks Rank #2 (Buy)

Manitex International, Inc (MNTX) has an Earnings ESP of +5.56% and a Zacks Rank #3 (Hold).

Read the Full Research Report on IP
Read the Full Research Report on MNTX
Read the Full Research Report on ADT
Read the Full Research Report on MINI

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