INTERNATIONAL PAPER CO /NEW/ (IP) Stock Analysis
INTERNATIONAL PAPER CO /NEW/ (IP) Stock Analysis
Overall Grade: F (Concerning)
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INTERNATIONAL PAPER CO /NEW/ faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 1.0% | Below expectations |
| FCF Margin | -0.7% | Cash flow pressure |
| Debt/Equity | 0.7x | Moderate leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
What is INTERNATIONAL PAPER CO /NEW/'s Profitability and ROIC?
INTERNATIONAL PAPER CO /NEW/'s return on invested capital of 1.0% is below the typical cost of capital. Gross margin of 25.8% with operating margin at 1.5% reflects the company's moderate market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 1.0% | Red flag | Below cost of capital |
| Return on Equity (ROE) | -28.9% | Red flag | Moderate equity returns |
| Gross Margin | 25.8% | Adequate | Competitive pricing environment |
| Operating Margin | 1.5% | Warning | Moderate operational efficiency |
How Strong is INTERNATIONAL PAPER CO /NEW/'s Cash Flow Quality?
INTERNATIONAL PAPER CO /NEW/ generated $-159.0M in free cash flow over the trailing twelve months, representing a -0.7% margin. FCF was positive in N/A of the last 8 quarters, indicating variable cash generation.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | -0.7% | Red flag | Thin cash margins |
| Free Cash Flow (TTM) | $-159.0M | Red flag | Cash burn |
| OCF/Net Income | -0.5x | Warning | Potential accrual concerns |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is INTERNATIONAL PAPER CO /NEW/'s Financial Health?
INTERNATIONAL PAPER CO /NEW/'s debt-to-equity ratio of 0.7x indicates conservative leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.7x | Good | Moderate leverage |
| Net Cash Position | $-8.7B | Warning | Net debt position |
Is INTERNATIONAL PAPER CO /NEW/ Stock Overvalued or Undervalued?
INTERNATIONAL PAPER CO /NEW/ trades at a P/E of -5.9x, representing a premium to the sector median of N/A. Free cash flow yield of -0.8% reflects market expectations for growth.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | -5.9x | Red flag | Reasonable valuation |
| EV/Sales | 1.2x | Excellent | Attractive revenue multiple |
| FCF Yield | -0.8% | Warning | Lower cash yield |
| Dividend Yield | 4.7% | Good | Meaningful income |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 1.0% | Bottom 25% | 0.1x below |
| Free Cash Flow Margin | -0.7% | Bottom 10% | -0.1x below |
| Gross Margin | 25.8% | Bottom 50% | 0.8x below |
| Operating Margin | 1.5% | Bottom 25% | 0.2x below |
| Return on Equity (ROE) | -28.9% | Top 5% | -3.2x below |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 1.0% (Red flag - Bottom 25% of sector (median: 8.0%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: -0.7% (Red flag)
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 25.8% (Adequate - Bottom 50% of sector (median: 33.4%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 66.3% (Good)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: -0.8% (Red flag)
Frequently Asked Questions
Q: What is INTERNATIONAL PAPER CO /NEW/'s Return on Invested Capital (ROIC)?
INTERNATIONAL PAPER CO /NEW/ (IP) has a trailing twelve-month Return on Invested Capital (ROIC) of 1.0%. This compares below the sector median of 8.0%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is INTERNATIONAL PAPER CO /NEW/'s Free Cash Flow Margin?
INTERNATIONAL PAPER CO /NEW/ (IP) has a free cash flow margin of -0.7%, generating $-159.0 million in free cash flow over the trailing twelve months. Negative free cash flow means the company is consuming cash, which may require financing.
Q: Is INTERNATIONAL PAPER CO /NEW/ stock overvalued or undervalued?
INTERNATIONAL PAPER CO /NEW/ (IP) trades at a P/E ratio of -5.9x, which is above the sector median of N/A. The EV/Sales multiple is 1.2x.
Q: Does INTERNATIONAL PAPER CO /NEW/ pay a dividend?
INTERNATIONAL PAPER CO /NEW/ (IP) currently pays a dividend yield of 4.7%. Including share buybacks, the total shareholder yield is 5.0%. A yield above 4% is attractive for income investors, though sustainability should be verified through payout ratio analysis.
Q: How much debt does INTERNATIONAL PAPER CO /NEW/ have?
INTERNATIONAL PAPER CO /NEW/ (IP) has a debt-to-equity ratio of 0.7x with total debt of $9.8 billion. Net debt position is $8.7 billion.
Q: What is INTERNATIONAL PAPER CO /NEW/'s revenue and earnings growth?
INTERNATIONAL PAPER CO /NEW/ (IP) grew revenue by 49.3% year-over-year. Double-digit revenue growth indicates strong demand and market share gains.
Q: How does INTERNATIONAL PAPER CO /NEW/ compare to competitors in Industrials?
Compared to other companies in Industrials, INTERNATIONAL PAPER CO /NEW/ (IP) shows: ROIC of 1.0% is below the sector median of 8.0% (Bottom 15%). FCF margin of -0.7% trails the sector median of 5.4%. Gross margin at 25.8% is 7.6 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Industrials companies with available SEC filings.
Q: What warning signs should I watch for with INTERNATIONAL PAPER CO /NEW/?
Investors in INTERNATIONAL PAPER CO /NEW/ (IP) should monitor these potential warning signs: 1) FCF margin is thin at -0.7%, leaving limited buffer for economic downturns. 2) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-06. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.