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International Paper (IP) Q4 Earnings Miss, Sales Top Estimates

International Paper Company IP reported fourth-quarter 2021 adjusted earnings of 78 cents per share, which missed the Zacks Consensus Estimate of 87 cents by a margin of 10%. However, the bottom line improved 47% year over year aided by strong demand and higher sales in its segments, which helped offset the impact of higher input costs and operational and supply chain constraints.

Including one-time items, the company posted earnings per share from continuing operations of 30 cents in fourth-quarter 2021 compared with 17 cents in the year-ago quarter.

Net sales were $5.09 billion in the quarter under review, up 14.5% from the year-ago quarter’s $4.44 billion. The top line beat the Zacks Consensus Estimate of $5 billion.

International Paper Company Price, Consensus and EPS Surprise

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

Adjusted cost of sales was $3,664 million in the fourth quarter, up 16.7% from the prior-year quarter’s $3,139 million. Adjusted gross profit increased 9.3% year over year to $1,422 million. Adjusted selling and administrative expenses were $342 million that decreased 4% year over year. Adjusted operating profit was $301 million, reflecting year-over-year growth of 46% from $206 million in the year-ago quarter.

Segment Performance

Industrial Packaging: The segment’s sales were $4.26 billion compared with the prior-year quarter’s $3.77 billion. Operating profit dipped 0.2% year over year to $414 million.

Global Cellulose Fibers: The segment’s sales climbed 19.7% year over year to $717 million in the fourth quarter. The segment reported an operating profit of $1 million in the quarter, against the year-ago quarter’s loss of $105 million.

Financial Position

Cash and temporary investments aggregated $1,295 million as of fiscal 2021 end compared with $468 million as of the end of fiscal 2020. In fiscal 2021, the company repurchased shares worth $811 million. At the end of the 2021, its long-term debt was at around $5.4 billion, down from $8 billion as of 2021-end. Cash flow from operating activities was $2 billion in the 2021 compared with $3.1 billion in the prior year.

International Paper expects demand to remain strong in 2022. However, the company anticipates the ongoing supply chain challenges to persist.

Fiscal 2021 Performance

For fiscal 2021, International Paper’s adjusted earnings was $3.20, which missed the Zacks Consensus Estimate of $4.04. However, earnings was 50% higher than the prior fiscal. Including one-time items, the company’s earnings from continuing operations was $2.86 per share in fiscal 2021 compared with 58 cents in fiscal 2020.

Total revenues advanced 10% year over year to around $19.4 million, which missed the Zacks Consensus Estimate of $21.7 million.

Price Performance

Image Source: Zacks Investment Research

International Paper’s shares have fallen 6.2% in the past year, compared with the industry’s growth of 1.8%.

Zacks Rank & Stocks to Consider

International Paper currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the basic materials space are Commercial Metals Company CMC, MP Materials MP and Nutrien NTR, all of which flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Commercial Metals has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised upward by 40% over the past 60 days.

Commercial Metals has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has rallied around 63% in a year.

The Zacks Consensus Estimate for MP Materials’ current fiscal-year earnings suggests year-over-year growth of 41%. The estimate has moved up 37% over the past 60 days.

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