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What Awaits International Paper (IP) in Q4 Earnings?

International Paper Company IP is scheduled to report fourth-quarter 2022 results before the opening bell on Jan 31.

Q4 Estimates

The Zacks Consensus Estimate for IP’s fourth-quarter sales is pegged at $5.18 billion, suggesting 2% growth from the prior-year quarter’s levels. The consensus mark for earnings is currently at 69 cents per share, indicating a year-over-year decline of 11.5%. The earnings estimates have gone down 1% in the past 30 days.

Q3 Performance

In the last reported quarter, International Paper witnessed a year-over-year decline in earnings despite higher revenues due to higher-than-expected energy and distribution costs. While revenues beat the Zacks Consensus Estimate, the bottom line missed the same.

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Over the trailing four quarters, the company has surpassed the Zacks Consensus Estimate for earnings in two quarters and missed twice, the average surprise being 7.8%.

International Paper Company Price and EPS Surprise

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

Factors to Note

International Paper has been witnessing weak packaging demand recently as the current inflationary pressures have weighed on the consumer, leading to lower demand for goods. This had a large impact on packaging demand, as consumer priorities have shifted toward non-discretionary goods and services.

Also, International Papers’ customers and the broader retail channel have been trying to lower their elevated inventories, which further impacted the packaging demand. The company has been cutting down its production levels to align with customer demand. This is likely to reflect in the company’s Industrial Packaging segment’s results in the to-be-reported quarter.

The Industrial Packaging segment’s margin is likely to have been hurt by higher operating and distribution costs due to the inflationary scenario.  For the fourth quarter of 2022, the company had stated that the price and mix in the export channel will likely be lower by $10 million sequentially.

Volume is expected to decrease by $30 million with four fewer days sequentially in North America and the traditional seasonal pickup from holiday demand was not expected to be as strong compared to previous years.  Maintenance outage expense is also expected to have impacted margins for the segment.

The Zacks Consensus Estimate for the Industrial Packaging segment’s revenues is currently pegged at $4,204 million, suggesting a 1.2% decrease from the prior-year quarter’s reported figure of $4,255 million. The segment’s operating profit for the quarter is projected to plunge 31% year over year to $287 million.

The Global Cellulose Fibers business has been witnessing solid consumer demand for absorbent pulp products. However, the segment’s performance is likely to have been impaired by persistent supply-chain issues. The company had earlier stated that the volume in the fourth quarter is expected to be lower by $10 million sequentially based on the timing of shipments through the supply chain. The Zacks Consensus Estimate for the segment’s fourth-quarter revenues is pegged at $885 million, suggesting an improvement of 23% from the year-ago quarter’s levels.

Operations and costs are expected to increase by $5 million due to seasonality and maintenance outage expense is expected to have gone up by $34 million. Input costs will be higher by $5 million, primarily related to energy costs at the converting operations in Poland. All of these factors are expected to have weighed on the segment’s margin performance in the fourth quarter of 2022.

Despite these headwinds, the estimate for the segment’s operating profit currently stands at $63 million, indicating a substantial improvement from the prior-year quarter’s operating earnings of $1 million. The segment had witnessed higher planned maintenance outage expenses and input costs for energy and chemicals in the last year quarter.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for International Paper this time around. 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 before they’re reported with our Earnings ESP Filter.

Earnings ESP: International Paper has an Earnings ESP of -0.83%.

Zacks Rank: The company currently carries a Zacks Rank of 3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Price Performance

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Zacks Investment Research


Image Source: Zacks Investment Research

Shares of International Paper have declined 23% in the past year compared with the industry's 16.4% fall.

Stocks to Consider

Here are some Basic Materials stocks, which, according to, our model, have the right combination of elements to post an earnings beat in their upcoming releases.

Agnico Eagle Mines Limited AEM, scheduled to release fourth-quarter 2022 earnings on Feb 16, has an Earnings ESP of +0.84% and sports a Zacks Rank of 1.

The consensus estimate for Agnico Eagle’s fourth-quarter earnings has been stable in the past 60 days. The Zacks Consensus Estimate for AEM’s earnings for the quarter is pegged at 40 cents.

Air Products and Chemicals APD, scheduled to release fourth-quarter 2022 earnings on Feb 2, has an Earnings ESP of +2.67% and currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for Air Products’ fourth-quarter earnings has been revised 0.4% upward in the past 60 days. The consensus estimate for APD’s earnings for the fourth quarter is currently pegged at $2.73.

Ashland Inc. ASH, expected to release fourth-quarter earnings on Feb 7, has an Earnings ESP of +21.32%.

The Zacks Consensus Estimate for Ashland’s fourth-quarter earnings is currently pegged at $1.06. ASH currently carries a Zacks Rank of 3.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report

International Paper Company (IP) : Free Stock Analysis Report

Ashland Inc. (ASH) : Free Stock Analysis Report

Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report

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