Is International Paper (IP) Undervalued As Shares Slide Toward $33?

International Paper (IP) has drawn fresh attention after its shares closed at US$33.17, extending a decline over the past month and past 3 months. That pullback now sits alongside improving annual revenue and net income figures.

For International Paper, the recent slide to US$33.17 caps a steady fade in momentum, with the share price down 12.55% over the past 30 days and 17.59% year to date, while the 1-year total shareholder return has fallen 24.73% despite a positive 3-year total shareholder return of 6.87%.

Compare International Paper's pullback with other packaging and materials businesses by scanning the list of solid balance sheet and fundamentals (25 results) for ideas that pair recent share price pressure with sturdier financial foundations.

International Paper now trades well below many analysts’ implied value after a sharp pullback. Has most of the easy upside already passed, or does the recent weakness still create room on the valuation side?

Most Popular Narrative: 30.6% Undervalued

Against the last close of $33.17, the most followed narrative for International Paper points to a fair value of about $47.82 and leans heavily on execution of very specific cost and pricing plans.

The company's substantial capital investments in automation, advanced manufacturing and mill reliability, funded by targeted asset divestitures and plant closures, are now tied to specific footprint changes. These investments are expected to contribute to the targeted structural cost removal of more than US$1b and are intended to lift net margins as remaining 80/20 and productivity initiatives roll through the income statement.

See why 15 investors see International Paper as 31% undervalued.

Result: Fair Value of $47.82 (UNDERVALUED)

Still, the International Paper narrative can crack if energy and transport costs stay elevated, or if execution missteps keep translating into guidance cuts and operating losses.

Find out about the key risks to this International Paper narrative.

Next Steps

Opinions are mixed on whether International Paper's situation currently presents more upside or risk. To make a well-informed assessment, review the full risk and reward breakdown for yourself through the 4 key rewards and 3 important warning signs.

Looking for more investment ideas beyond International Paper?

Do not stop with International Paper. Use the Simply Wall St screener to quickly surface fresh opportunities that fit your style before the market moves on.

• Target resilient earners by reviewing the 31 resilient stocks with low risk scores and focus your attention on companies where business risk screens relatively lower.
• Hunt for strong value setups using the 31 high quality undervalued stocks and filter for businesses that combine healthier fundamentals with compressed valuations.
• Zero in on income opportunities through the 7 dividend fortresses and focus on companies offering higher yields with a focus on durability.

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.

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