Materials Companies Face EPS Downgrades, PKG Rated Lowest
Written by Emily J. Thompson, Senior Investment Analyst
Source: seekingalpha
- Earnings Downgrades: As earnings season approaches, analysts have broadly downgraded earnings expectations for materials companies, with Packaging Corporation of America (PKG) rated the lowest, indicating a lack of market confidence in its near-term performance.
- Rating Distribution: Among large-cap materials firms, FRPM International (RPM) and PPG Industries (PPG) received grades of D- and D respectively, suggesting a pessimistic outlook from analysts that could impact investor sentiment.
- Industry Trends: Overall, International Paper (IP) and POSCO Holdings (PKX) both received D grades, reflecting the challenges faced by the materials sector in the current economic climate, potentially leading to capital outflows.
- Market Performance: While the materials sector is expected to outperform the energy sector in 2026, the current earnings downgrades may affect short-term investment decisions, particularly among companies with weaker earnings momentum.
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Analyst Views on IP
Wall Street analysts forecast IP stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for IP is 48.35 USD with a low forecast of 36.00 USD and a high forecast of 57.80 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
12 Analyst Rating
9 Buy
2 Hold
1 Sell
Moderate Buy
Current: 41.490
Low
36.00
Averages
48.35
High
57.80
Current: 41.490
Low
36.00
Averages
48.35
High
57.80
About IP
International Paper Company provides sustainable packaging solutions. The Company is a global producer of renewable fiber-based packaging and pulp products. Its segments include Packaging Solutions North America, Packaging Solutions EMEA and Global Cellulose Fibers. Packaging Solutions North America and Packaging Solutions EMEA segments are primarily focused on producing fiber-based packaging. It produces linerboard, medium, whitetop, recycled linerboard, recycled medium and saturating kraft of which a majority of its production is converted into corrugated packaging and other packaging. Global Cellulose Fibers segment primarily focuses on producing cellulose fibers which is a renewable raw material used in a variety of products people depend on every day such as diapers, towel and tissue products, feminine care, incontinence and other personal care products. Its specialty pulps serve as a sustainable raw material used in textiles, construction materials, paints, coatings and more.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
International Paper Set to Release Q4 Earnings on January 29
- Earnings Release Date: International Paper is set to announce its Q4 2023 earnings on January 29 before market open, with consensus EPS estimate at $0.25 and revenue at $5.89 billion, reflecting a 28.6% year-over-year increase.
- Performance Expectations: Historically, International Paper has only beaten EPS estimates 38% of the time and revenue estimates 25% of the time over the past two years, indicating significant volatility that may affect investor confidence.
- Revision Trends: In the last three months, there have been no upward revisions to EPS estimates and eight downward revisions, while revenue estimates saw one upward and seven downward revisions, suggesting a weakening market outlook for the company.
- Industry Dynamics: Packaging stocks are under scrutiny due to reports of containerboard price increases; while International Paper faces performance pressures, the overall price hikes in the industry may provide some support.
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International Paper to Split into Two Independent Companies
- Strategic Spin-off Plan: International Paper announced its plan to separate its North American and EMEA operations into two independent publicly traded companies, aiming to maximize shareholder value through focused market strategies, with completion expected in 12-15 months.
- North America Focus: Post-separation, International Paper will concentrate on the North American market, leveraging its 80/20 performance system and innovation capabilities to enhance customer service and supply chain efficiency, thereby driving profitability and cash flow growth.
- EMEA Packaging Development: The newly formed EMEA Packaging company will focus on innovation and sustainability, operating in 30 countries and aiming to enhance market leadership by optimizing resource allocation and meeting evolving market demands.
- Stable Leadership Team: Following the separation, Andy Silvernail will continue as Chairman and CEO of International Paper, ensuring leadership and strategic consistency during the transformation process.
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