International Paper Earnings: Rising Costs Weigh on Results Despite Selling Price Gains

No-moat-rated International Paper reported underwhelming first-quarter results as net sales fell 8% year over year, with both segments experienced declines in the quarter. This was largely driven by lower volumes as pricing recovered well. Destocking headwinds, which have weighed on both segments, continue to improve in North America, and it appears the worst is likely behind the company. That said, corrugated packaging end markets remain pressured, and we expect higher input costs, mainly for old corrugated containers, or OCC, will likely pressure margins over the next few quarters. As such, we've decreased our fair value estimate to $40 from $41 per share due to lower near-term revenue and profitability in our forecast.