International Paper Co.IP

Morningstar Rating

Stock Research and Analysis

by Daniel Rohr, CFA

Following a flurry of divestitures, investments, and acquisitions, today's International Paper looks vastly different from the sprawling forest product player it was a few years back. We think this series of moves ultimately makes IP a more focused Read more

Bulls Say

Industry consolidation in North America places a greater share of capacity in uncoated paper and containerboard under fewer roofs. Producers like IP should benefit from increased pricing power.

Existing Eastern European and Russian facilities are very low-cost and provide a gateway to emerging markets. The joint venture with Ilim will further expand growth opportunities in this area.

Management's decision to pare its business segments and concentrate on selected product lines will ensure better strategic focus and simplify capital allocation. Read more

Bears Say

The paper and packaging industry is plagued by poor industry fundamentals. Despite recent consolidation trends, the threat of overcapacity remains and will make it challenging for any firm to generate returns above its cost of capital over the long haul.

Large bets in Russia may come back to bite IP. Moscow has a less-than-stellar record when it comes to respecting the rights of foreign firms operating in the natural resources industry.

Despite its overseas expansion, IP remains a predominantly North American manufacturer. Competitors in lower-cost geographies are rapidly increasing capacity, which could threaten the long-term profitability of North American producers. Read more

Strategy

IP management has undertaken a major strategic shift during the last couple of years, transforming an integrated forest product company with a broad range of businesses into a more focused paper and Read more

Management

John Faraci, a veteran of the company, has served as chairman and CEO since 2003. We credit Faraci and his team for their aggressive cost-cutting initiatives and moves to align IP's portfolio around its core businesses. With perfect hindsight, however, Read more

Profile

International Paper is a global paper and packaging company with operations in the United States, Europe, South America, and Asia. The company's primary business segments Read more

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