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Goldman Sachs Rated International Paper Company as ‘Neutral’

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Sep. 26 2016, Updated 8:06 a.m. ET

Price movement

International Paper Company (IP) has a market cap of $19.7 billion. It fell 1.2% to close at $47.91 per share on September 22, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.70%, 2.0%, and 31.3%, respectively, on the same day.

IP is trading 1.2% below its 20-day moving average, 2.5% above its 50-day moving average, and 17.9% 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 6.5% on September 22.

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

  • Packaging Corporation of America (PKG) — $7.6 billion
  • Domtar Corp. (UFS) — $2.4 billion
  • KapStone Paper and Packaging (KS) — $1.8 billion

International Paper’s rating

Goldman Sachs has initiated the coverage of International Paper Company with a “neutral” rating and set the stock’s price target at $49.00 per share.

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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% compared to net sales of $5.7 billion in 2Q15. Sales from its Industrial Packaging and Consumer Packaging segments fell 2.6% and 37.1%, respectively, and sales from its Printing Papers segment rose 1.8% in 2Q16 compared to 2Q15. It reported net losses on sales and impairment of businesses of $28.0 million in 2Q16.

Its 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 19.4%, and its inventories fell 2.8% in 2Q16 compared to 4Q15. Its current ratio rose to 1.68x, and its long-term debt-to-equity ratio fell to 2.2x in 2Q16 compared to a current ratio and long-term debt-to-equity ratio 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% compared to 2Q15.

In the next part, we’ll discuss WestRock Company (WRK).

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