NEW YORK (TheStreet) -- Shares of International Paper Co. are up 0.08% to $53.41 in pre-market trade after Wells Fargo Securities upgraded the company to "outperform" from "market perform" with a valuation range of $62 to $64. "We are upgrading shares of IP given: an improving demand trajectory in the domestic containerboard market, margin improvement opportunity in the company's Latin American corrugated operations and contribution from high-return capital projects completed in the past 12 to 18 months," Wells Fargo said. Margin improvement from lower input costs and the potential for a spring containerboard price increase that could drive $310 million in EBIT improvement and 50 cent/share in EPS on an annual basis also prompted the upgrade, analysts added. Exclusive Report: Jim Cramer's Best Stocks for 2015 STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. Additionally, valuation is "attractive" with at least 10% free cash flow yield and the company maintains "ample firepower" to pursue accretive acquisitions with $2.2 billion in FCF generation, analysts said. Due to a devaluation in the Russian Ruble, the Wells Fargo reduced their Q4 2014 estimate to 47 cents from 76 cents, but increased their 2015 and 2016 estimates to $4.20 from $4 and to $4.80 from $4.30, respectively. International Paper is a global paper and packaging company. Separately, TheStreet Ratings team rates INTL PAPER CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation: "We rate INTL PAPER CO (IP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income." Highlights from the analysis by TheStreet Ratings Team goes as follows: Despite its growing revenue, the company underperformed as compared with the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year. INTL PAPER CO's earnings per share declined by 8.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INTL PAPER CO increased its bottom line by earning $3.00 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($3.27 versus $3.00). Net operating cash flow has increased to $933.00 million or 31.03% when compared to the same quarter last year. Despite an increase in cash flow, INTL PAPER CO's average is still marginally south of the industry average growth rate of 32.10%. The gross profit margin for INTL PAPER CO is currently lower than what is desirable, coming in at 25.85%. Regardless of IP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IP's net profit margin of 5.86% compares favorably to the industry average. You can view the full analysis from the report here: IP Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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