International Paper Third Quarter Earnings Preview

International Paper (NYSE:IP) will release its third quarter results on Thursday, October 25, 2012. Analysts are expecting earnings per share of 77 cents after the company booked a profit of only 92 cents a share a year earlier.



A business' earnings are the main determinant of its share price because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run. SEE: Surprising Earnings Results

What to Expect: Analysts are projecting earnings of 77 cents per share for International, 16.3% less than a year ago, when the company reported earnings of 92 cents per share.

In the last 30 days, the consensus estimate has jumped from 76 cents, but it is short of the estimate of 82 cents from three months ago. Analysts are expecting earnings of $2.56 per share for the fiscal year.

Revenue is expected to exceed last year's figure of $6.63 billion by 6.8% and come in at $7.08 billion for the quarter. The anticipated revenue for the fiscal year is $27.89 billion.



Company Performance: The average revenue increase over the past four quarters is 1.7%. The biggest jump was a rise of 6.5% from the year-earlier quarter in the most recent quarter.

IP's P/E ratio of 14.8 falls below the industry average of 19.17. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Understanding The P/E Ratio



Over the past quarter, the stock price has risen to $37.42 from $31.41 on July 24, 2012. International's best recent streak was when its price gained $2.12 per share between September 5, 2012 and September 7, 2012.





The Competition: International Paper is a global paper and packaging company with operations in North America, Europe, Latin America, Russia, Asia and North Africa. The company's closest competitor in the containers and packaging industry, MeadWestvaco (MWV), will report earnings on October 23, 2012. Analysts are expecting earnings of 39 cents per share for MeadWestvaco, down 44.3% from last year's earnings of 70 cents per share. Analysts are more optimistic about International than about MeadWestvaco. Only eight out of 10 analysts rate the latter a buy compared to nine of 12 for the former.