International Paper Company

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

International Paper Company is a producer of renewable fiber-based packaging and pulp products with manufacturing operations. The Company operates through two segments: Industrial Packaging and Global Cellulose Fibers. The Industrial Packaging segment is a manufacturer of containerboard in the United States. The Cellulose Fibers segment offers a product portfolio, including fluff, market, and specialty pulps. The Company operates over 24 pulp and packaging mills, approximately 163 converting and packaging plants, over 16 recycling plants, and over three bag facilities. Its production facilities are located in Canada, Europe, North Africa, and Latin America.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~45.52% of the total shareholding. The Vanguard Group, Inc. and T. Rowe Price Associates, Inc are holding the maximum stake in the company at ~11.98% and ~7.69%, respectively.

1.4 Key Metrics:

From the graph below, IP has shown improvement in margins in Q2FY22 as compared to Q2FY21, across all the segments showing robust business performance and healthy growth post the Covid-19 downfall and the slowness in the economy. Additionally, the improvement in revenues, margin expansion, and efficient cost of management helped the company to deleverage its balance sheet risk on a YoY basis.

1.5 Consistent dividend History

IP has a consistent dividend-paying history. IP declared a quarterly dividend of USD 0.4625 per share for the period from July 1, 2022. This dividend is payable on September 15, 2022, to holders of record at the close of business on August 15, 2022.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q2FY22:

Section 3: Key Risks

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance. 

Note 2: The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavorable movement in the stock prices. 

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