Long-established in the Packaging & Containers industry, International Paper Co (IP, Financial) has built a stellar reputation over the years. Recently, the company experienced a daily gain of 1.7%, alongside a significant three-month change of 30.86%. Despite these gains, the latest insights from the GF Score suggest potential challenges ahead. Key metrics such as financial strength, growth, and valuation indicate that International Paper Co might struggle to maintain its historical performance levels. This article delves into these critical factors to uncover the evolving narrative of International Paper Co.
What Is the GF Score?
The GF Score is a proprietary stock performance ranking system developed by GuruFocus. It evaluates stocks based on five key aspects: financial strength, profitability, growth, valuation, and momentum. These aspects have been closely correlated with long-term stock performance from 2006 to 2021. Stocks with higher GF Scores typically yield higher returns. Thus, investors are advised to consider stocks with high GF Scores for potential investments. The GF Score ranges from 0 to 100, with 100 representing the highest possible score.
- Financial strength rank: 5/10
- Profitability rank: 7/10
- Growth rank: 4/10
- GF Value rank: 1/10
- Momentum rank: 9/10
Based on these metrics, GuruFocus assigned International Paper Co a GF Score of 68 out of 100, signaling a cautious outlook on its future performance potential.
Understanding International Paper Co's Business
International Paper Co, with a market cap of $19.996 billion and sales of $18.64 billion, is a dominant player in the packaging products and cellulose fibers market. It controls approximately one-third of the North American corrugated packaging market. While the company has operations in Brazil, India, and China, over three-fourths of its sales are generated from North America. International Paper serves diverse end markets, including industrial, consumer products, and manufacturing sectors.
Financial Strength Breakdown
International Paper Co's financial strength reveals some concerns. The company's interest coverage ratio of 0.9 is lower than 91.54% of its industry peers, indicating potential difficulties in managing interest expenses on its debt. Furthermore, its Altman Z-Score of 2.4, although not signaling immediate distress, suggests caution. The company's low cash-to-debt ratio of 0.2 also highlights challenges in managing existing debt levels.
Growth Prospects and Predictability
The company's growth prospects appear limited, as reflected by its low Growth rank. Additionally, International Paper Co's predictability rank of one star out of five adds to the uncertainty regarding its revenue and earnings consistency.
Conclusion
Considering International Paper Co's financial strength, profitability, and growth metrics, the GF Score highlights the firm's challenging position for potential underperformance. Investors should weigh these factors carefully when considering this stock. For those seeking more robust investment opportunities, explore companies with strong GF Scores using the GF Score Screen available to GuruFocus Premium members.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
