International Paper Company
IP Details
International Paper Company (NYSE: IP) is a global producer of renewable fibre-based packaging, pulp, and paper operating in North America, Latin America, Europe, North Africa, and Europe. Its operating segments are 1) Industrial Packaging, 2) Global Cellulose Fibers and 3) Printing Papers.
Latest News:
- Quarterly Dividend: On May 10, 2022, the company declared a quarterly dividend of USD 0.4625 per common share, payable on June 15, 2022, to shareholders of record on May 27, 2022.
Q1FY22 Results:
- Double Digit Growth in Topline: The company reported a YoY growth of 14.02% in net sales to USD 5.24 billion in Q1FY22 (ended March 31, 2022) from USD 4.59 billion in Q1FY21, driven by 12.11% growth in Industrial Packaging segment.
- Growth in Profitability: In Q1FY22, MMS' net income increased to USD 360 million from USD 349 million in Q1FY21.
- Cash and Debt Position: The company had USD 1.32 billion in cash and cash equivalents (including short-term investments) as of March 31, 2022, and total debt of USD 5.67 billion.
Key Risk:
- Cyclical Industry: The business is in the container and packaging industry, subject to economic cyclicality and shifting consumer tastes. These factors may lower demand for the company's products and, as a result, the ASP.
- Climate Change: Climate change and local weather conditions impact the company's and its suppliers' operating success.
Outlook:
FY22 Guidance (Source: Q1FY22, Earnings Presentation, April 28, 2022)
Valuation Methodology: EV/Sales Multiple Based Relative Valuation
(Analysis by Kalkine Group)
* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation:
IP' stock price has fallen 16.33% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 40.45 to USD 61.80. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 52.90.
Considering the correction in the stock price, improvement in margins and cash cycle, positive outlook, associated risks, and current valuation. We recommend a "Hold" rating on the stock at the current price of USD 47.47, down 0.42% as of May 12, 2022, at 07:47 AM PDT.
Three-Year Technical Price Chart (as on May 12, 2022, at 07:47 AM PDT). Source: REFINITIV, Analysis by Kalkine Group
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: All forecasted figures and industry information have been taken from REFINITIV.
Note 3: The report publishing date is as per the Pacific Time Zone.
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