The Zacks Consensus Estimate for IP’s first-quarter sales is pegged at $4.9 billion, suggesting a 6.4% fall from the prior-year quarter’s reported levels. The consensus mark for earnings is pegged at 51 cents per share, indicating a year-over-year decline of 32.9%. Earnings estimates have moved up 2% in the past 60 days.
International Paper Company Price and EPS Surprise
In the last reported quarter, International Paper witnessed year-over-year improvements in earnings and revenues. While earnings beat the Zacks Consensus Estimate, the top line missed the same.
Over the trailing four quarters, the company has surpassed the Zacks Consensus Estimate for earnings in three quarters , the average surprise being 16.9%.
Factors to Note
International Paper has been witnessing weak packaging demand recently, as the current inflationary pressures have weighed on consumers, leading to lower demand for goods. This had a great impact on packaging demand, as consumer priorities have shifted toward non-discretionary goods and services.
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 get reflected 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 first quarter of 2023, the company expects the price and mix in the export channel to lower earnings by $65 million, owing to prior index movement in North America and declining average export prices. Operations and costs are expected to lower earnings by $65 million, driven by the non-repeat of favorable one-time items in the previous quarter.
The Zacks Consensus Estimate for the Industrial Packaging segment’s revenues is pegged at $3,932 million, suggesting a 10.8% decrease from the prior-year quarter’s reported figure of $4,406 million. The segment’s operating profit for the quarter is projected to plunge 18.1% year over year to $325 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 Zacks Consensus Estimate for the segment’s first-quarter revenues is pegged at $782 million, suggesting an improvement of 10.1% from the year-ago quarter’s reported levels.
The estimate for the segment’s operating profit is pegged at $21.67 million, indicating a substantial improvement from the prior-year quarter’s reported operating loss of $49 million. The segment had witnessed higher planned maintenance outage expenses and input costs for energy and chemicals in the prior-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 -7.17%.
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.
Shares of International Paper have declined 26.4% in the past year compared with the industry‘s 30.6% fall.
Image Source: Zacks Investment Research
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.
B2Gold Corp BTG, scheduled to release first-quarter 2023 earnings on May 9, currently has an Earnings ESP of +16.67% and a Zacks Rank of 3.
The consensus estimate for B2Gold’s first-quarter earnings has moved up 20% in the past 60 days. The Zacks Consensus Estimate for BTG’s earnings for the quarter is pegged at 6 cents.
Air Products and Chemicals APD, scheduled to release first-quarter 2023 earnings on May 9, has an Earnings ESP of +2.25% and carries a Zacks Rank of 3 at present.
The Zacks Consensus Estimate for Air Products’ first-quarter earnings has been unchanged in the past 60 days. The consensus estimate for APD’s earnings for the first quarter is pegged at $2.64.
Koppers KOP, expected to release first-quarter earnings on May 5, has an Earnings ESP of +12.66%. KOP currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for Koppers’ first-quarter earnings is pegged at 76 cents.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.