At US$35.96, Is It Time To Put International Paper Company (NYSE …
International Paper Company (NYSE:IP) saw significant share price movement during recent months on the NYSE, rising to highs of US£41.82 and falling to the lows of US£34.06. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether International Paper’s current trading price of US£35.96 reflective of the actual value of the large-cap?
Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at International Paper’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for International Paper
Is International Paper Still Cheap?
Good news, investors!
International Paper is still a bargain right now according to my price multiple model, which compares the company’s price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that International Paper’s ratio of 7.22x is below its peer average of 12.98x, which indicates the stock is trading at a lower price compared to the Packaging industry.
What’s more interesting is that, International Paper’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from International Paper?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations.
Though in the case of International Paper, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? Although IP is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to IP, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on IP for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
In light of this, if you’d like to do more analysis on the company, it’s vital to be informed of the risks involved. When we did our research, we found 3 warning signs for International Paper (1 can’t be ignored!) that we believe deserve your full attention. If you are no longer interested in International Paper, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
What are the risks and opportunities for International Paper?
International Paper Company produces renewable fiber-based packaging and pulp products in North America, Latin America, Europe, and North Africa.
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Rewards
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Trading at 52.3% below our estimate of its fair value
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Earnings grew by 114.7% over the past year
Risks
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Earnings are forecast to decline by an average of 5.6% per year for the next 3 years
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Significant insider selling over the past 3 months
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Has a high level of debt
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Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
