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What's in Store for International Paper's (IP) Q4 Earnings?

·5 min read

International Paper Company IP is scheduled to report fourth-quarter 2020 results, before the opening bell on Feb 4.

Q4 Estimates

The Zacks Consensus Estimate for International Paper’s fourth-quarter earnings is currently pegged at 84 cents, indicating a year-over-year decline of 23%. Moreover, the Zacks Consensus Estimate for total sales is pinned at $5.26 billion for the to-be-reported quarter, suggesting a fall of 4.3% year on year.

Q3 Performance

In the last reported quarter, International Paper’s earnings and revenues beat the respective Zacks Consensus Estimate. However, both top- and bottom-line figures declined year over year.

International Paper Company Price and EPS Surprise

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 conclusively predicts 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.

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 +2.20%.

Zacks Rank: International Paper currently sports a Zacks Rank of 1.

Factors to Note

International Paper’s products are essential to produce and deliver food, pharmaceuticals, hygiene products and emergency supplies for consumers globally. Additionally, the coronavirus pandemic has been fueling e-commerce growth as consumers’ demand for online grocery, beverage and pharmaceuticals delivery services has skyrocketed following the containment measures imposed by governments globally. These factors might get reflected in International Paper’s fourth-quarter top-line figure.

However, higher operational costs might have hurt the Industrial Packaging segment’s quarterly earnings. Moreover, surging input costs primarily due to higher energy and transportation costs are expected to have dented the segment’s margin. The Zacks Consensus Estimate for the segment’s revenues is currently pegged at $3,835 million compared with the prior-year quarter’s $3,810 million. The segment’s operating profit for the quarter is projected to decline 17.5% year on year to $499 million.

The Zacks Consensus Estimate for the Printing Papers segment revenues is pegged at $830 million, suggesting a decline of 22.2% from the year-earlier quarter. Paper consumption in schools, offices and businesses has been affected by the pandemic, consequently straining paper demand. Though demand for printing papers is improving, it remained below the prior-year levels. The company has also been witnessing unprecedented decline in commercial printing segments due to the significant pullback in print advertising. These are likely to have dampened the Printing Paper segment’s performance during the December-end quarter. Apart from this, surging input costs as well as higher operational and maintenance outage costs are likely to have hurt the segment. This segment is expected to report an operating profit of $72 million in fourth-quarter 2020 compared with $109 million in the prior-year quarter.

In the Global Cellulose Fibers business, lower price and mix as well as elevated operational costs might have weighed on the segment’s quarterly bottom-line performance. Moreover, higher maintenance outage expenses are expected to have eroded the segment’s performance during the period under review. The Zacks Consensus Estimate for the segment’s revenues is pegged at $566 million for the quarter to be reported, suggesting a decline of 1.9% from the year-ago period. This segment is likely to report an operating loss of $81 million for the fourth quarter compared with the operating loss of $45 million in the prior-year period.

Price Performance

Shares of International Paper have gained 40.5% in the past six months, compared to the industry's growth of 43.4%.

Stocks Poised to Beat Estimates

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

Vale S.A. VALE currently flaunts a Zacks Rank #1 and has an Earnings ESP of +4.17%. You can see the complete list of today’s Zacks #1 Rank stocks here.

New Gold Inc. NGD has an Earnings ESP of +36.36% and holds a Zacks Rank of 2 currently.

Bunge Limited BG has an Earnings ESP of +3.09% and carries a Zacks Rank #2, at present.

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