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International Paper Co IP

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Morningstar’s Analysis

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Abysmal Paper Sales Offset by Packaging Strength in Tough Fourth Quarter for International Paper

Charles Gross Equity Analyst

Analyst Note

| Charles Gross |

Unsurprisingly, International Paper's fourth quarter was a mixed bag. Paper demand remains anemic, with many students and white-collar workers stuck at home. However, packaging demand remained robust as people purchased a larger share of goods online. Altogether, quarterly sales fell by roughly 5%, and adjusted operating earnings dipped by over 30% year on year. Both figures are ultimately poised to rebound over the coming two years as coronavirus vaccinations become prevalent and economic conditions normalize. We have raised our fair value estimate to $49 per share from $46, mainly due to the time value of money. Our no-moat rating is unchanged. Shares look fairly valued, trading firmly in 3-star territory.

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Company Profile

Business Description

International Paper manufactures packaging products and printing papers. It accounts for roughly one third of the North American corrugated packaging market and about 25% of the uncoated free sheet paper market. Though it has operations in Brazil, Russia, India, and China, more than three fourths of its sales come from North America.

6400 Poplar Avenue
Memphis, TN, 38197
T +1 901 419-9000
Sector Consumer Cyclical
Industry Packaging & Containers
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 49,300