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Why Did International Paper Rise on August 10?


Aug. 12 2016, Updated 12:05 p.m. ET

Price movement

International Paper Company (IP) has a market cap of $19.4 billion. It rose by 1.6% to close at $46.79 per share on August 10, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.3%, 5.9%, and 27.1%, respectively, on the same day.

IP is trading 3.1% above its 20-day moving average, 7.4% above its 50-day moving average, and 17.4% above its 200-day moving average.

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Related ETF and peers

The Guggenheim MSCI Global Timber ETF (CUT) invests 4.3% of its holdings in International Paper. The ETF tracks the MSCI ACWI IMI Timber Select Capped Index, a market-cap-weighted index of global timber equities. The YTD price movement of CUT was 4.1% on August 10.

The market caps of International Paper’s competitors are as follows:

  • Packaging Corporation of America (PKG) — $7.1 billion
  • Domtar Corp. (UFS) — $2.5 billion
  • KapStone Paper and Packaging (KS) — $1.4 billion

International Paper rose on speculation

International Paper rose by 1.6% on August 10, 2016, after the speculation that Koch Industries could buy International Paper.

TheStreet Ratings reported, “If International Paper paired with Georgia-Pacific, BMO Capital said the merger could pose regulatory challenges and would mandate divestitures. The most glaring challenges would be in the container board and fluff pulp sector.”

TheStreet Ratings rated International Paper as a “hold” with a score of C+.

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Performance of International Paper in 2Q16

International Paper (IP) reported 2Q16 net sales of $5.3 billion, a fall of 7.0% from its net sales of $5.7 billion in 2Q15. Sales from its Industrial Packaging and Consumer Packaging segments fell by 2.6% and 37.1%, respectively, and sales from its Printing Papers segment rose by 1.8% between 2Q15 and 2Q16. IP reported net losses on sales and impairment of businesses of $28.0 million in 2Q16.

IP’s net income and EPS (earnings per share) fell to $40.0 million and $0.10, respectively, in 2Q16, compared to $227.0 million and $0.54, respectively, in 2Q15.

IP’s cash and temporary investments rose by 19.4%, and its inventories fell by 2.8% between 4Q15 and 2Q16. Its current ratio rose to ~1.7x, and its long-term debt-to-equity ratio fell to 2.2x in 2Q16, compared to its current and long-term debt-to-equity ratios of 1.65x and 2.3x, respectively, in 4Q15. It reported free cash flow of $527.0 million in 2Q16, a rise of 3.1% from 2Q15.

Quarterly dividend

International Paper declared a quarterly dividend of $0.44 per share on its common stock. The dividend will be paid on September 15, 2016, to shareholders of record at the close of business on August 15, 2016.

In the next part, we’ll take a look at how Ralph Lauren performed in 1Q17.


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