mick
5 years ago
International Paper Company (NYSE:IP) saw a significant share price rise of over 20% in the past couple of months on the NYSE.
https://finance.yahoo.com/news/now-time-look-buying-international-133744144.html
With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stockโs share price. However, could the stock still be trading at a relatively cheap price? Letโs examine International Paperโs valuation and outlook in more detail to determine if thereโs still a bargain opportunity.
See our latest analysis for International Paper
What is International Paper worth?
Good news, investors! International Paper is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, Iโve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stockโs cash flows. I find that International Paperโs ratio of 11.03x is below its peer average of 16.5x, which indicates the stock is trading at a lower price compared to the Packaging industry. However, given that International Paperโs share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of International Paper look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so letโs also take a look at the company's future expectations. With profit expected to grow by 42% over the next couple of years, the future seems bright for International Paper. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Since IP is currently below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.
Are you a potential investor? If youโve been keeping an eye on IP for a while, now might be the time to make a leap. Its prosperous future profit outlook isnโt fully reflected in the current share price yet, which means itโs not too late to buy IP. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters โ the fundamentals โ before you make a decision on International Paper. You can find everything you need to know about International Paper in the latest infographic research report. If you are no longer interested in International Paper, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.