Is International Paper (IP) Offering An Opportunity After A 24.7% One Year Share Price Decline

• If you are wondering whether International Paper is offering good value right now, you are not alone. This is especially true with sentiment around packaging and materials stocks constantly shifting.
• The share price recently closed at US$39.56, with returns of 0.4% over 7 days, 2.7% over 30 days, a 1.7% decline year to date, and a 24.7% decline over 1 year, while the 3 year and 5 year returns sit at 20.6% and 2.1% respectively.
• Recent coverage around International Paper has focused on its role as a major player in paper and packaging, and how investors are weighing the stock against sector peers as demand patterns evolve. This broader context is helping to frame whether the current share price and sentiment line up with what investors expect from a large, cyclical business.
• On our checks, International Paper scores a full 6 out of 6 on valuation. This sets up a closer look at how different valuation approaches view the shares and, later in the article, an even more rounded way to think about what that means for you.

Find out why International Paper's -24.7% return over the last year is lagging behind its peers.

Approach 1: International Paper Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth today by taking projected future cash flows and discounting them back to a present value.

For International Paper, the model used is a 2 Stage Free Cash Flow to Equity approach, working off recent free cash flow of a loss of $259.2m. Analysts provide specific forecasts for the next few years, and Simply Wall St then extrapolates those to build a longer term picture. In this case, the ten year pathway moves to projected free cash flow of $3.1b in 2035, with intermediate years such as 2026 at $998.0m and 2029 at $2.1b.

When those projected cash flows are discounted back using this model, the estimated intrinsic value comes out at about US$97.60 per share. Compared with the recent share price of US$39.56, this estimate suggests a 59.5% discount, which indicates that the shares screen as undervalued on this DCF framework.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests International Paper is undervalued by 59.5%. Track this in your watchlist or portfolio, or discover 880 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for International Paper.

Approach 2: International Paper Price vs Sales

For companies where earnings can be noisy, using the P/S ratio can be a useful way to compare what investors are paying for each dollar of revenue. It is often easier to interpret than P/E when profits are low or when one off items affect earnings.

In general, higher growth expectations and lower perceived risk can support a higher “normal” trading multiple, while slower growth or higher risk can justify a lower one. That context matters when you compare ratios across a sector.

International Paper currently trades on a P/S of 0.86x, compared with the Packaging industry average of 0.95x and a peer group average of 1.37x. Simply Wall St also calculates a proprietary “Fair Ratio” for the stock of 1.75x, which reflects factors such as earnings growth, industry, profit margin, market cap and company specific risks.

This Fair Ratio goes a step further than simple peer or industry comparisons, because it aims to tailor the expected multiple to the company’s own characteristics rather than assuming one size fits all.

Set against this Fair Ratio of 1.75x, the current P/S of 0.86x suggests that International Paper trades at a discount on this metric.

Result: UNDERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your International Paper Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, where you tell the story behind your numbers by linking your view on International Paper’s future revenue, earnings and margins to a financial forecast, a fair value estimate and a clear comparison to today’s price. All of this is available within Simply Wall St’s Community page, which is used by millions of investors and automatically updates your Narrative when new news or earnings arrive. One investor might plug in a fair value near US$63.00 with a more optimistic view on earnings, while another might anchor closer to US$42.10 with more cautious assumptions. You can then see exactly how each story translates into a different view on whether the current share price of US$46.88 looks attractive or stretched.

Do you think there's more to the story for International Paper? Head over to our Community to see what others are saying!

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.

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