International Paper (IP) Up 3.8% Since Last Earnings Report: Can It Continue?

Core Viewpoint - International Paper reported a mixed performance in its Q2 2024 earnings, with adjusted earnings surpassing estimates but showing a year-over-year decline due to lower prices in key segments [2][3]. Financial Performance - Adjusted earnings per share were 55 cents, exceeding the Zacks Consensus Estimate of 40 cents by 38%, but down 7% year-over-year [2]. - Net sales reached approximately $4.7 billion, a 1% increase from the previous year, although it fell short of the consensus estimate of $4.8 billion [2]. - Adjusted EBITDA was $561 million, compared to $570 million in the same quarter last year, with an adjusted EBITDA margin of 11.9%, reflecting a 30-basis point contraction year-over-year [3]. Segment Performance - Industrial Packaging: Sales totaled $3.9 billion, up 1% year-over-year, with operating profit declining 4% to $291 million. Total volumes increased by 2.4% to 4,037 thousand short tons [4]. - Global Cellulose Fibers: Sales rose 3% year-over-year to $717 million, with operating profit at $31 million, marking a return to profitability after two quarters of losses. Volumes increased by 9% to 684 thousand metric tons [5]. Cost and Debt Position - Adjusted cost of sales was $3.3 billion, down 0.7% from the previous year, while gross profit increased by 6% to $1.4 billion [3]. - Cash and temporary investments totaled $1.05 billion at the end of Q2, down from $1.11 billion at the end of 2023. Long-term debt decreased to $5.33 billion from $5.46 billion [6]. Future Expectations - The company anticipates lower volumes in the Industrial Packaging segment for Q3 due to seasonal factors and one less operational day. Earnings are expected to dip from Q2 levels [8]. - A downward trend in estimates has been observed, with a significant shift of -62.4% in consensus estimates over the past month [9]. Investment Scores - International Paper holds an average Growth Score of C and a Momentum Score of F, but a Value Score of B, placing it in the top 40% for value investment strategy [10].