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What's in Store for International Paper's (IP) Q1 Earnings?

Zacks Equity Research

International Paper Company IP is scheduled to report first-quarter 2020 results, before the opening bell on Apr 30.

Q1 Estimates

The Zacks Consensus Estimate for International Paper’s first-quarter earnings is currently pegged at 43 cents, indicating a significant decline of 61.3% from the year-ago quarter reported figure. Moreover, the Zacks Consensus Estimate for total sales stands at $5.23 billion for the March-end quarter, suggesting a year-over-year decline of 7.4%.

Q4 Performance

In the last reported quarter, International Paper’s earnings surpassed the Zacks Consensus Estimate, while sales had missed the same. Both earnings and revenues declined year over year.  Notably, International Paper beat estimates in the trailing four quarters by 12.9%, on average.

Factors at Play

International Paper’s products are essential to produce and deliver food, pharmaceuticals, hygiene products and emergency supplies for consumers globally. Consequently, the North American Industrial Packaging segment continues to gain from the e-commerce boom and export volume of containerboard. In addition, the coronavirus pandemic has fueled e-commerce growth as consumers’ demand for online grocery, beverage and pharmaceuticals delivery services has skyrocketed following the travel restrictions imposed by governments all over.

However, soft price and mix, higher maintenance outages and weak volume owing to the lower seasonal demand in North America might have negatively impacted Industrial Packaging segment’s first-quarter 2020 performance.  The Zacks Consensus Estimate for the segment’s revenues is currently pegged at $3,631 million, suggesting a decline of 5.2% year over year. The segment’s operating profit for the quarter is projected to decline 16.6% year over year to $337 million.

The Zacks Consensus Estimate for the Printing Papers segment revenues is $1,001 million, calling for a decline of 6% from the prior-year quarter. In the Printing Papers business, reduced volume primarily on lower seasonal demand in Brazil as well as higher maintenance outage costs are likely to have impacted earnings in the to-be-reported quarter. Also, the coronavirus outbreak has affected paper consumption in schools, offices and businesses, straining paper demand.

In the Global Cellulose Fibers business, elevated operational costs, maintenance outage costs and reduced price and mix due to the prior index movement are likely to have thwarted the segment’s bottom line in the first quarter. The Zacks Consensus Estimate for the segment’s revenues is pegged at $571 million for the March-end quarter, suggesting a decline of 17% from the year-ago period. This segment is expected to incur an operating loss of $77 million in the first quarter as against the operating income of $32 million recorded in the prior-year period.

Moreover, rising input costs and distribution costs are likely to have clipped margins in the first quarter.

International Paper Company Price and EPS Surprise

International Paper Company Price and EPS Surprise

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

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for International Paper this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for International Paper is -13.45%.

Zacks Rank: International Paper currently carries a Zacks Rank of 4 (Sell).

Price Performance

Shares of International Paper have lost 33.1% in the past year compared with the industry's decline of 38.7%

 



Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows that they have the right combination of elements to post earnings beat this quarter:

Axon Enterprise, Inc. AAXN has an Earnings ESP of +2.13% and carries a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lawson Products, Inc. LAWS currently carries a Zacks Rank #3 and has an Earnings ESP of +3.85%.

Ball Corporation BLL, another Zacks #3 Ranked stock, has an Earnings ESP of +1.56%.

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International Paper Company (IP) : Free Stock Analysis Report
 
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