We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's in Store for International Paper (IP) in Q1 Earnings?
Read MoreHide Full Article
Leading packaging and paper manufacturer International Paper Company (IP - Free Report) is scheduled to report first-quarter 2017 results before the opening bell on Apr 27. In the last reported quarter, the company’s adjusted earnings missed the Zacks Consensus Estimate by 2 cents. In the trailing four quarters, the company topped earnings estimates thrice with an average positive surprise of 6.3%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
International Paper is undergoing restructuring initiatives to transform itself into a core packaging company. It intends to invest $300 million through 2017 to further improve its North American containerboard mill system, enhance product quality, and reduce manufacturing and delivery costs. These projects are expected to have a collective internal rate of return of 20%. Moving forward, International Paper intends to focus more resources on high-return capital projects within its core businesses that can drive additional earnings growth.
Mergers and acquisitions remain a key strategy for International Paper to strengthen its long-term business proposition. In North America, the company envisions a large opportunity within its industrial packaging businesses, which continue to generate the best margins in the industry. The company is taking initiatives to drive further margin expansion over time across the businesses.
International Paper completed the acquisition of leading timberland owner Weyerhaeuser Co.’s pulp business for $2.2 billion in cash. With a combined capacity of nearly 1.9 million metric tons of pulp, the transaction is likely to strengthen International Paper’s position in the global fluff pulp market and augment its operating cash flow. In addition, the company expects the acquisition to generate annual synergies of approximately $175 million by the end of 2018 along with providing higher flexibility to manage a wide portfolio of products to meet customer needs through superior R&D capabilities and priceless patent portfolio.
However, the company depends heavily on raw materials such as wood fiber, purchased in the form of pulpwood, wood chips and old corrugated containers (OCC), and certain chemicals, including caustic soda and starch, and energy sources, principally natural gas, coal and fuel oil. Rising energy, chemical and OCC costs remain headwinds, particularly under harsh winter conditions. This is likely to lower its profitability to some extent.
International Paper has a huge burden of pension obligations for substantially all U.S. salaried employees hired prior to July 1, 2004 and largely all hourly and union employees regardless of hire date. Pension plan assets are primarily made up of equity and fixed income investments. Fluctuations in actual equity market returns, changes in general interest rates and changes in the number of retirees are likely to increase pension costs and reduce its cash flow, thereby limiting the positives from its acquisition binge – a primary growth driver.
Earnings Whispers
Our proven model does not conclusively show that International Paper is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently at 0.00%. This is because both Zacks Consensus Estimate and Most Accurate estimate stand at 57 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
International Paper Company Price and EPS Surprise
Zacks Rank: International Paper has a Zacks Rank #3. While this increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Pepsico, Inc. (PEP - Free Report) with an Earnings ESP of +1.10% and a Zacks Rank #3.
Ensco plc with an Earnings ESP of +22.22% and a Zacks Rank #3.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Image: Bigstock
What's in Store for International Paper (IP) in Q1 Earnings?
Leading packaging and paper manufacturer International Paper Company (IP - Free Report) is scheduled to report first-quarter 2017 results before the opening bell on Apr 27. In the last reported quarter, the company’s adjusted earnings missed the Zacks Consensus Estimate by 2 cents. In the trailing four quarters, the company topped earnings estimates thrice with an average positive surprise of 6.3%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
International Paper is undergoing restructuring initiatives to transform itself into a core packaging company. It intends to invest $300 million through 2017 to further improve its North American containerboard mill system, enhance product quality, and reduce manufacturing and delivery costs. These projects are expected to have a collective internal rate of return of 20%. Moving forward, International Paper intends to focus more resources on high-return capital projects within its core businesses that can drive additional earnings growth.
Mergers and acquisitions remain a key strategy for International Paper to strengthen its long-term business proposition. In North America, the company envisions a large opportunity within its industrial packaging businesses, which continue to generate the best margins in the industry. The company is taking initiatives to drive further margin expansion over time across the businesses.
International Paper completed the acquisition of leading timberland owner Weyerhaeuser Co.’s pulp business for $2.2 billion in cash. With a combined capacity of nearly 1.9 million metric tons of pulp, the transaction is likely to strengthen International Paper’s position in the global fluff pulp market and augment its operating cash flow. In addition, the company expects the acquisition to generate annual synergies of approximately $175 million by the end of 2018 along with providing higher flexibility to manage a wide portfolio of products to meet customer needs through superior R&D capabilities and priceless patent portfolio.
However, the company depends heavily on raw materials such as wood fiber, purchased in the form of pulpwood, wood chips and old corrugated containers (OCC), and certain chemicals, including caustic soda and starch, and energy sources, principally natural gas, coal and fuel oil. Rising energy, chemical and OCC costs remain headwinds, particularly under harsh winter conditions. This is likely to lower its profitability to some extent.
International Paper has a huge burden of pension obligations for substantially all U.S. salaried employees hired prior to July 1, 2004 and largely all hourly and union employees regardless of hire date. Pension plan assets are primarily made up of equity and fixed income investments. Fluctuations in actual equity market returns, changes in general interest rates and changes in the number of retirees are likely to increase pension costs and reduce its cash flow, thereby limiting the positives from its acquisition binge – a primary growth driver.
Earnings Whispers
Our proven model does not conclusively show that International Paper is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently at 0.00%. This is because both Zacks Consensus Estimate and Most Accurate estimate stand at 57 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
International Paper Company Price and EPS Surprise
International Paper Company Price and EPS Surprise | International Paper Company Quote
Zacks Rank: International Paper has a Zacks Rank #3. While this increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Methanex Corporation (MEOH - Free Report) , with an Earnings ESP of +13.04% and a Zacks Rank #1.You can see the complete list of today’s Zacks #1 Rank stocks here.
Pepsico, Inc. (PEP - Free Report) with an Earnings ESP of +1.10% and a Zacks Rank #3.
Ensco plc with an Earnings ESP of +22.22% and a Zacks Rank #3.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>