Second quarter earnings at International Paper Co. (NYSE: IP – $45.99) came in at $292 million and operating earnings were $460 million equal to adjusted earnings of $1.15 per share compared with $1.19 in the second quarter of 2018 and fifteen cents ahead of analysts’ estimates. Second quarter cash provided by operations of $1.1 billion and year-to-date of $1.8 billion compared with $1.5 billion year-to-date in the same period of 2018. Net sales for the second quarter was $5.667 billion vs. $5.833 billion last year, and below Street expectations of $5.850 billion. Printing Papers saw increased revenue, which was offset by declines in Industrial Packaging and Global Cellulose Fibers.
The shares rose 4.25% in today’s trading, but Wall Street is concerned that demand for cardboard, one of the company’s biggest sources of business, is slowing. What’s more, it also expects inventories in the supply channels to come down at a gradual pace. This comes at a time industry-wide supply is set to accelerate in the years ahead. Due to the recent price correction, IP stock, yielding 4.5%, is trading at depressed valuations, which serves as a potentially good entry point for aggressive investors looking for a paper company with recovery potential.