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International Paper Co IP

Morningstar Rating
$44.99 +0.85 (1.93%)
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Company Report

International Paper: Suzano’s Failed Takeover Bid Does Not Change Our Long-Term Thesis

It was reported on June 27 that Suzano, a Brazilian packaging manufacturer had withdrawn its takeover bid for International Paper. Last month, it was reported that Suzano offered to acquire International Paper for $15 billion, representing $42 per share. Contingent for the deal would be that International Paper would have to cease its acquisition of DS Smith. International Paper rejected this initial offer, and it appears the sides never engaged in negotiations. Now, Suzano has officially dropped its takeover bid without issuing a stronger offer. Given that this outcome was largely expected, we are maintaining our $40 fair value estimate.

Price vs Fair Value

IP is trading at a 683% premium.
Price
$44.14
Fair Value
$23.00
Uncertainty
Medium
1-Star Price
$42.00
5-Star Price
$66.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

After a decade of adjusting its business model to improve profitability, International Paper will enjoy solid returns as it now operates primarily as a containerboard company.

Bears

Despite a period of attractive margin expansion in containerboard production, the best days are behind International Paper as new capacity weighs on linerboard prices.

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News

Trading Information

Previous Close Price
$44.14
Day Range
$44.0545.03
52-Week Range
$30.7947.39
Bid/Ask
$44.99 / $45.00
Market Cap
$15.63 Bil
Volume/Avg
1.9 Mil / 7.0 Mil

Key Statistics

Price/Earnings (Normalized)
24.39
Price/Sales
0.83
Dividend Yield (Trailing)
4.19%
Dividend Yield (Forward)
4.19%
Total Yield
4.60%

Company Profile

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Brazil, India, and China, more than three fourths of its sales come from North America. International Paper serves a variety of end markets, including industrial, consumer products, and manufacturing.
Sector
Consumer Cyclical
Industry
Packaging & Containers
Stock Style Box
Mid Value
Total Number of Employees
39,000

Competitors

Valuation

Metric
IP
WY
PKG
Price/Earnings (Normalized)
24.3929.9422.63
Price/Book Value
1.852.114.14
Price/Sales
0.832.802.13
Price/Cash Flow
8.9215.9212.90
Price/Earnings
IP
WY
PKG

Financial Strength

Metric
IP
WY
PKG
Quick Ratio
1.181.371.59
Current Ratio
1.682.242.46
Interest Coverage
1.203.9120.92
Quick Ratio
IP
WY
PKG

Profitability

Metric
IP
WY
PKG
Return on Assets (Normalized)
2.68%4.17%8.85%
Return on Equity (Normalized)
7.46%7.02%18.97%
Return on Invested Capital (Normalized)
5.62%5.75%11.36%
Return on Assets
IP
WY
PKG
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Economic Moat
Market Cap
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PKG
KtpvhvxmtFbzsw$16.7 Bil
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CCK
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DpfjhcfwzYsgbf$5.2 Bil
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