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International Paper (IP) to Post Q4 Earnings: What's in Store?

International Paper Company IP is scheduled to report fourth-quarter 2021 results, before the opening bell on Jan 27.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter total sales is pegged at $5 billion, suggesting a decline of 4.6% from the prior-year quarter. The consensus mark for earnings currently stands at 87 cents, indicating year-over-year growth of 16%. The earnings estimates have gone down 7% over the past 30 days.

Q3 Performance

In the last reported quarter, International Paper’s earnings and revenues improved year over year but missed the respective Zacks Consensus Estimate. Over the trailing four quarters, the company has surpassed the Zacks Consensus Estimate for earnings in two of the trailing quarters and missed twice, the average surprise being 2.9%.

Factors to Note

International Paper’s products are essential for producing and delivering food, pharmaceuticals, hygiene products and emergency supplies to consumers globally. Growing e-commerce demand has been providing a significant boost to the company’s performance as it has become a primary spending channel for customers due to the containment measures amid the coronavirus pandemic. However, the widespread supply-chain constraints might have limited its ability to capitalize on the full opportunity from the strong level of demand. These factors are likely to get reflected in International Paper’s fourth-quarter results.

Escalating recovered fiber, energy, chemicals, wood, distribution and transportation costs might have impacted margins in the quarter. A structural failure at its Prattville paper mill had led to an unplanned outage in the to-be-reported quarter. The company had cautioned that inflated costs and the impact of the Prattville paper mill outage might act as a headwind of $95-$105 million on fourth-quarter earnings.

The Zacks Consensus Estimate for the Industrial Packaging segment’s revenues is currently pegged at $4,286 million compared with the prior-year quarter’s reported figure of $3,813 million. Solid demand for corrugated and containerboard packaging is likely to have favored the segment’s sales performance. The fourth quarter is a seasonally strong quarter for the segment. However, higher input costs (mostly fiber and energy) and maintenance outage expenses might have somewhat dented the segment’s margins. The segment’s operating profit for the quarter is projected to increase 6% year over year to $455 million.

The Global Cellulose Fibers business has been witnessing solid consumer demand for the absorbent hygiene and pulp products. However, the segment’s pulp shipments might have been negatively impacted by port congestion and vessel delays. The Zacks Consensus Estimate for the segment’s fourth-quarter revenues is pegged at $700 million, suggesting an improvement of 20% from the year-ago period. Higher input costs, operational costs and maintenance outage expenses may have eroded the segment’s performance in the period under review. This segment is likely to report an operating profit of around $8 million for the fourth quarter against an operating loss of $114 million incurred in the prior-year period.

What the Zacks Model Unveils

Our proven model conclusively predicts 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.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: International Paper has an Earnings ESP of +3.25%.

Zacks Rank: It currently carries a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Price Performance

Image Source: Zacks Investment Research

Shares of International Paper have fallen 8.8% over the past year, compared with the industry's decline of 0.7%.

Other Stocks Poised to Beat Estimates

Here are some other Basic Materials stocks which you may consider, as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases.

MP Materials MP has an Earnings ESP of +41.46% and a Zacks Rank #1. The Zacks Consensus Estimate for the company’s earnings for the fourth quarter of 2021 suggests year-over-year growth of 16.7%.

Shares of MP Materials have gained 20.7% over the past year. MP’s earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 155%.

Nutrien NTR has an Earnings ESP of +0.36% and a Zacks Rank #1. The Zacks Consensus Estimate for the company’s earnings for the fourth quarter of 2021 indicates year-over-year growth of 862%.

Shares of Nutrien have appreciated 33.8% over the past year. NTR’s earnings beat the consensus mark in three of the trailing four quarters and missed once, the average surprise being 73.5%.

CF Industries CF has an Earnings ESP of +9.44% and a Zacks Rank #2. The Zacks Consensus Estimate for the company’s earnings for the fourth quarter of 2021 indicates year-over-year growth of 712%.

Shares of CF Industries have gained 51.9% over the past year. Over the last four quarters, CF’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 97.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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International Paper Company (IP): Free Stock Analysis Report
CF Industries Holdings, Inc. (CF): Free Stock Analysis Report
MP Materials Corp. (MP): Free Stock Analysis Report
Nutrien Ltd. (NTR): Free Stock Analysis Report
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