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International Paper Company Just Missed Earnings - But Analysts Have Updated Their Models

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International Paper Company (NYSE:IP) shareholders are probably feeling a little disappointed, since its shares fell 6.5% to US$47.03 in the week after its latest full-year results. It looks like a pretty bad result, all things considered. Although revenues of US$21b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 23% to hit US$1.22 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for International Paper

earnings-and-revenue-growth
earnings-and-revenue-growth

After the latest results, the twelve analysts covering International Paper are now predicting revenues of US$21.6b in 2021. If met, this would reflect a credible 5.0% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 210% to US$3.81. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$21.5b and earnings per share (EPS) of US$3.90 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$52.60, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic International Paper analyst has a price target of US$65.00 per share, while the most pessimistic values it at US$40.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting International Paper's growth to accelerate, with the forecast 5.0% growth ranking favourably alongside historical growth of 1.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect International Paper to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for International Paper. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for International Paper going out to 2025, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 5 warning signs for International Paper you should be aware of.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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