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Will Lower Prices Hurt International Paper's (IP) Q2 Earnings?
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International Paper Company (IP - Free Report) is scheduled to report second-quarter 2024 results before the opening bell on Jul 24.
The Zacks Consensus Estimate for IP’s second-quarter revenues is pegged at $4.76 billion, indicating 1.7% growth from the year-ago reported figure.
The consensus estimate for earnings is pegged at 40 cents per share. Of the four analysts providing estimates for the second quarter, three have lowered their estimates, while one has kept the same unchanged over the past 60 days. The Zacks Consensus Estimate for IP’s second-quarter earnings has moved down 11% in the past 60 days. The estimate indicates a year-over-year decline of 32.2%.
Image Source: Zacks Investment Research
Earnings Surprise History
International Paper’s earnings beat the Zacks Consensus Estimates in three of the trailing four quarters and missed in one, the average surprise being 10.9%.
Image Source: Zacks Investment Research
What the Zacks Model Unveils
Our model 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. That is precisely the case here.
You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Earnings ESP: International Paper has an Earnings ESP of +2.53%.
Zacks Rank: The company currently sports a Zacks Rank of 1.
Factors Likely to Have Shaped Q2 Performance
Even though demand had been down through the major part of 2023, reflecting inventory destocking at customers’ end, the company noted that there was a pickup in demand lately. The company has been seeing stable demand in the e-commerce channel as packaging plays a critical role in the supply chain to bring essential products to consumers. This is likely to get reflected in the company’s second-quarter results.
Overall, volumes for the Industrial Packaging segment are projected to be 4,029 thousand short tons in the second quarter of 2024, which indicates 2.2% year-over-year growth. Our estimate for containerboard volumes is 741 thousand short tons, which indicates year-over-year growth of 23.5%.
The Industrial Packaging segment is likely to witness a year-over-year improvement in volume in Saturated Kraft (7.9%) and a slight improvement in EMEA Packaging (1.1%), which is likely to be offset by declines in Gypsum /Release Kraft (4.7%) and corrugating packaging volumes (2.8%).
However, the impacts of higher volumes are expected to have been offset by lower prices in the second quarter, owing to prior index movement in North America and lower average export prices. We expect average realized pricing for the Industrial Packaging segment to be 3% lower year over year. We anticipate a 0.9% decline in Industrial Packaging’s revenues to $3.84 billion on lower prices. The segment’s margin is likely to have been hurt by higher input costs (particularly old corrugated container costs), and operating and distribution costs. Our model projects the segment’s quarterly operating profit to plunge 16.9% to $253 million.
Volume is expected to have been stable for the Global Cellulose Fibers business in the second quarter. We expect the segment’s volumes to be 729 thousand metric tons, indicating a 16.6% year-over-year rise. Pricing is expected to decline 13.5% year over year.
The segment’s second-quarter revenues, per our model, are estimated to be $705 million, suggesting growth of 0.9% from the year-ago quarter’s reported level. The estimate for the segment’s operating profit is $4 million, which indicates an 86.6% decline from the prior-year actual. This reflects higher seasonal costs, and energy and chemical costs.
Price Performance
Shares of International Paper have gained 52.7% in the past year compared with the industry's 42.5% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
Here are some other companies in the basic materials space, which, according to our model, also have the right combination of elements to post an earnings beat this quarter:
The consensus estimate for Agnico Eagle Mines’ earnings for the second quarter is pegged at 82 cents per share, indicating growth of 26.2% from the prior-year quarter’s actual. Earnings estimates have moved 1.2% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 16.4%.
ATI Inc. (ATI - Free Report) , set to release second-quarter 2024 earnings on Aug 6, presently has an Earnings ESP of +3.50% and a Zacks Rank of 3.
The Zacks Consensus Estimate for ATI’s second-quarter earnings has moved up 1.8% in the past 60 days. The consensus estimate for ATI’s earnings for the quarter is pegged at 58 cents per share. It has an average trailing four-quarter earnings surprise of 8.3%.
Avient (AVNT - Free Report) , scheduled to release second-quarter earnings on Aug 6, currently has an Earnings ESP of +0.20% and a Zacks Rank of 3.
The Zacks Consensus Estimate for AVNT's earnings for the second quarter is pegged at 72 cents per share, which projects a 14.3% increase from the year-ago quarter’s reported figure. AVNT has a trailing four-quarter average surprise of 6%.
Image: Bigstock
Will Lower Prices Hurt International Paper's (IP) Q2 Earnings?
International Paper Company (IP - Free Report) is scheduled to report second-quarter 2024 results before the opening bell on Jul 24.
The Zacks Consensus Estimate for IP’s second-quarter revenues is pegged at $4.76 billion, indicating 1.7% growth from the year-ago reported figure.
The consensus estimate for earnings is pegged at 40 cents per share. Of the four analysts providing estimates for the second quarter, three have lowered their estimates, while one has kept the same unchanged over the past 60 days. The Zacks Consensus Estimate for IP’s second-quarter earnings has moved down 11% in the past 60 days. The estimate indicates a year-over-year decline of 32.2%.
Image Source: Zacks Investment Research
Earnings Surprise History
International Paper’s earnings beat the Zacks Consensus Estimates in three of the trailing four quarters and missed in one, the average surprise being 10.9%.
Image Source: Zacks Investment Research
What the Zacks Model Unveils
Our model 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. That is precisely the case here.
You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Earnings ESP: International Paper has an Earnings ESP of +2.53%.
Zacks Rank: The company currently sports a Zacks Rank of 1.
Factors Likely to Have Shaped Q2 Performance
Even though demand had been down through the major part of 2023, reflecting inventory destocking at customers’ end, the company noted that there was a pickup in demand lately. The company has been seeing stable demand in the e-commerce channel as packaging plays a critical role in the supply chain to bring essential products to consumers. This is likely to get reflected in the company’s second-quarter results.
Overall, volumes for the Industrial Packaging segment are projected to be 4,029 thousand short tons in the second quarter of 2024, which indicates 2.2% year-over-year growth. Our estimate for containerboard volumes is 741 thousand short tons, which indicates year-over-year growth of 23.5%.
The Industrial Packaging segment is likely to witness a year-over-year improvement in volume in Saturated Kraft (7.9%) and a slight improvement in EMEA Packaging (1.1%), which is likely to be offset by declines in Gypsum /Release Kraft (4.7%) and corrugating packaging volumes (2.8%).
However, the impacts of higher volumes are expected to have been offset by lower prices in the second quarter, owing to prior index movement in North America and lower average export prices. We expect average realized pricing for the Industrial Packaging segment to be 3% lower year over year. We anticipate a 0.9% decline in Industrial Packaging’s revenues to $3.84 billion on lower prices. The segment’s margin is likely to have been hurt by higher input costs (particularly old corrugated container costs), and operating and distribution costs. Our model projects the segment’s quarterly operating profit to plunge 16.9% to $253 million.
Volume is expected to have been stable for the Global Cellulose Fibers business in the second quarter. We expect the segment’s volumes to be 729 thousand metric tons, indicating a 16.6% year-over-year rise. Pricing is expected to decline 13.5% year over year.
The segment’s second-quarter revenues, per our model, are estimated to be $705 million, suggesting growth of 0.9% from the year-ago quarter’s reported level. The estimate for the segment’s operating profit is $4 million, which indicates an 86.6% decline from the prior-year actual. This reflects higher seasonal costs, and energy and chemical costs.
Price Performance
Shares of International Paper have gained 52.7% in the past year compared with the industry's 42.5% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
Here are some other companies in the basic materials space, which, according to our model, also have the right combination of elements to post an earnings beat this quarter:
Agnico Eagle Mines (AEM - Free Report) , scheduled to release second-quarter 2024 earnings on Jul 31, currently has an Earnings ESP of +5.93% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Agnico Eagle Mines’ earnings for the second quarter is pegged at 82 cents per share, indicating growth of 26.2% from the prior-year quarter’s actual. Earnings estimates have moved 1.2% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 16.4%.
ATI Inc. (ATI - Free Report) , set to release second-quarter 2024 earnings on Aug 6, presently has an Earnings ESP of +3.50% and a Zacks Rank of 3.
The Zacks Consensus Estimate for ATI’s second-quarter earnings has moved up 1.8% in the past 60 days. The consensus estimate for ATI’s earnings for the quarter is pegged at 58 cents per share. It has an average trailing four-quarter earnings surprise of 8.3%.
Avient (AVNT - Free Report) , scheduled to release second-quarter earnings on Aug 6, currently has an Earnings ESP of +0.20% and a Zacks Rank of 3.
The Zacks Consensus Estimate for AVNT's earnings for the second quarter is pegged at 72 cents per share, which projects a 14.3% increase from the year-ago quarter’s reported figure. AVNT has a trailing four-quarter average surprise of 6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.