International Paper Poised on Inorganic Growth, Risks Remain

On Jun 16, we issued an updated research report on paper and packaging firm International Paper Company IP.

International Paper is undergoing restructuring initiatives to transform itself into a core packaging company. The company intends to invest $300 million through 2017 to improve its North American containerboard mill system, enhance product quality, and reduce manufacturing and delivery costs. These projects are expected to have a collective internal rate of return of 20%.

Moving forward, International Paper intends to focus more resources on high-return capital projects within its core businesses that can drive additional earnings growth. The company has outperformed the Zacks categorized Paper & Paper Products industry in the last three months with an average return of 8.7% compared with a 7.3% gain for the latter.