A Fresh Look at International Paper's Valuation After Georgia Mill Closures and Sliding Packaging Demand

If you are holding or watching International Paper (NYSE:IP), the recent announcement probably made you pause. The company plans to close two mills in Georgia by the end of September, a move that will reduce U.S. containerboard capacity by about 9%. With corrugated packaging demand sliding to its lowest point since 2016, International Paper’s decision signals how quickly the landscape is shifting in the packaging sector and why investors need to pay attention right now.

These closures put International Paper’s near-term outlook in sharp relief. While the company has posted some annual growth in revenue, the sector-wide downturn is clearly weighing on sentiment. The stock has fallen around 5% over the past month and roughly 13% year-to-date, though it is only slightly lower over the last year. This pattern points to fading momentum, especially as the broader economic backdrop remains challenging and other recent events, such as the EPA’s cleanup plan approval, compete for focus.

So, with share prices sliding alongside demand, is International Paper undervalued after this announcement or is the market already bracing for weaker growth ahead?

Most Popular Narrative: 14.5% Undervalued

The most widely followed narrative sees International Paper as undervalued, projecting significant upside based on future earnings growth and margin improvement.

"The company's substantial capital investments in automation, advanced manufacturing, and mill reliability, funded by targeted asset divestitures and plant closures, are expected to reduce operating costs and materially expand net margins over the next several years."

What’s fueling this optimism? There is a bold thesis inside this narrative, centered on International Paper’s ability to transform profits with new technology and sharper business focus. Interested in details on the projected earnings increase and the surprisingly aggressive profit targets underlying the consensus price target? This forecast reveals the company’s ambitious path to value creation, but it is not for everyone to see at a glance.

Result: Fair Value of $54.33 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent mill reliability issues or ongoing weak demand in Europe could quickly undermine the positive outlook for International Paper’s future earnings growth.

Find out about the key risks to this International Paper narrative.

Another View: Valuing Through Sales Multiples

While the fair value model says International Paper is undervalued, looking at its price-to-sales ratio paints a less optimistic picture. Using this approach, the company actually appears pricey compared to its industry. Which method deserves more weight?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding International Paper to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own International Paper Narrative

If the current consensus does not align with your perspective, you are free to dive into the numbers and form your own view of International Paper. Creating and sharing your narrative can take just a few minutes. Do it your way

A great starting point for your International Paper research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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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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