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International Paper Whiffs on Earnings

By Seth Jayson - Updated Apr 10, 2017 at 1:30PM

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Just the facts, Fool.

International Paper (NYSE: IP) reported earnings on May 2. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), International Paper met expectations on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue expanded. Non-GAAP earnings per share increased. GAAP earnings per share increased significantly.

Gross margins grew, operating margins contracted, net margins grew.

Revenue details
International Paper recorded revenue of $7.09 billion. The 12 analysts polled by S&P Capital IQ hoped for revenue of $7.06 billion on the same basis. GAAP reported sales were 6.5% higher than the prior-year quarter's $6.66 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.65. The 16 earnings estimates compiled by S&P Capital IQ anticipated $0.74 per share. Non-GAAP EPS of $0.65 for Q1 were 14% higher than the prior-year quarter's $0.57 per share. (The prior-year quarter included $0.01 per share in earnings from discontinued operations.) GAAP EPS of $0.71 for Q1 were 65% higher than the prior-year quarter's $0.43 per share. (The prior-year quarter included $0.01 per share in earnings from discontinued operations.)

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 26.4%, 100 basis points better than the prior-year quarter. Operating margin was 6.4%, 70 basis points worse than the prior-year quarter. Net margin was 4.5%, 170 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $7.37 billion. On the bottom line, the average EPS estimate is $0.72.

Next year's average estimate for revenue is $29.41 billion. The average EPS estimate is $3.77.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 440 members out of 507 rating the stock outperform, and 67 members rating it underperform. Among 156 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 149 give International Paper a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on International Paper is outperform, with an average price target of $51.20.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

International Paper Company Stock Quote
International Paper Company
IP
$42.59 (1.91%) $0.80

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