What's in the Offing for International Paper's (IP) Q3 Earnings?

International Paper Company IP is scheduled to report third-quarter 2020 results, before the opening bell on Oct 29.

Q3 Estimates

The Zacks Consensus Estimate for International Paper’s third-quarter earnings is currently pegged at 47 cents, indicating a significant decline of 56.8% from the year-ago quarter. Moreover, the Zacks Consensus Estimate for total sales is pinned at $5.03 billion for the to-be-reported quarter, suggesting a fall of 9.6%, year on year.

Q2 Performance

In the last reported quarter, International Paper’s earnings beat the Zacks Consensus Estimate but sales missed the same. 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-eps-surprise | International Paper Company Quote

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 third-quarter top-line figure.

However, soft price and mix due to the flow through of prior index movements in North America is likely to have hurt Industrial Packaging segment’s third-quarter performance. Operations and costs are expected to have been negatively impacted by higher costs associated with the Riverdale mill start-up and higher seasonal costs in the North American box business during the July-September quarter.

Paper consumption in schools, offices and businesses has been affected by the pandemic, consequently straining paper demand. 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 results in the September-end quarter. Apart from this, lower price and mix as well as higher maintenance outage costs are likely to have hurt the segment.

In the Global Cellulose Fibers business, lower volumes and elevated operational costs might have weighed on the segment’s third-quarter performance. Moreover, higher maintenance outage expenses and increased input costs are expected to have dented the segment’s bottom-line performance in the period under review.

Earnings Whispers

Our proven model doesn’t conclusively predict 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. But that’s not the case here. 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 -25.53%.

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

Price Performance

Shares of International Paper have gained 26.7% in the past six months, outperforming the industry's growth of 22.9%

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:

Huntsman Corporation HUN currently carries a Zacks Rank #2 and an Earnings ESP of +13.51%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eastman Chemical Company EMN has an Earnings ESP of +0.89% and holds a Zacks Rank of 2 currently.

Newmont Corporation NEM has an Earnings ESP of +1.90% and carries a Zacks Rank #2, at present.

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International Paper Company (IP): Free Stock Analysis Report
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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.

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