International Paper (IP)

Conclusion

International Paper produces renewable, fibre-based packaging, including linerboard, medium and corrugated boxes, across North America, Latin America, Europe and North Africa. At a price of 35.53 USD on 2026-11-09, the market capitalisation is 18.8 billion USD and the enterprise value is 28.1 billion USD.

The verdict is overvalued. Price to free cash flow stands at 250.9 against a ten-year median of 12.4, price to sales at 0.78 against 0.94, and price to book at 1.43 against 2.31. The DCF gives 2.66 USD per share at a discount rate of 9.6%. The fair value band runs from 18.20 to 27.30 USD with a midpoint of 22.75 USD, a margin of safety of -36.0% at the current price. The fair value from historical multiples is 42.84 USD. The reverse DCF implies growth of 42.3% a year, against revenue growth of 7.2% a year over five years.

What holds the case up is free cash flow conversion over five years of 670.1% and a Beneish M-score of -2.62, which reads as unlikely to reflect manipulation. What breaks it is an operating margin of -14.3% against a ten-year median of 8.1%, ROIC of -12.1% against a WACC of 7.6%, and interest coverage of -8.36. The Altman Z-score of 0.99 sits in the distress zone.

Financial health

Red, pulled down by the Altman Z-score, interest coverage and the net debt to EBITDA assessment, with no metric assessed good. The current ratio is 1.01 and the quick ratio 0.60 as of 2026-09-30, with the current ratio on watch. Debt to equity is 0.77. Net debt to EBITDA is not available because EBITDA is negative. Trailing interest coverage is -8.36, so operating results do not cover interest. The Altman Z-score is 0.99, in the distress zone; the model was built for manufacturers, which this company is. Insolvency risk: low, about 1.5% by the estimate of the Ohlson model over one to two years, as of 2025-12-31.

Earnings quality

Yellow, held up by the Beneish M-score of -2.62 and five-year free cash flow conversion of 670.1%, and pulled down by a share count that has risen 5.9% a year over five years. Trailing free cash flow conversion is not available. The accrual ratio is -17.2%, and trailing free cash flow after stock-based compensation is 75 million USD. Stock-based compensation is not reported, so its share of revenue is not available. The Piotroski score is 4 of 9. Over the last eight quarters the company beat estimates three times and missed five times, with an average surprise of -41.3%. Estimates for the current year have fallen 22.7% over 90 days, with five downward revisions and none upward in the last 30 days. Next-year estimates are down 6.5% over 90 days, with the same five downward revisions.

Profitability

Red, with all four assessed metrics pulling it down. The gross margin is 27.8% against a ten-year median of 29.1%. The operating margin is -14.3% against a median of 8.1%, and the net margin is -14.3% against a median of 5.7%. ROIC is -12.1% against a WACC of 7.6%, and the given ROIC minus WACC value of -19.6% is labelled as destroying value. The five-year median ROIC is 4.8%. Return on equity is -26.3%, so leverage does not flatter it. The DuPont split for 2025-12-31 shows a net margin of -14.1%, an asset turnover of 0.66 and an equity multiplier of 2.56. The tax rate of 21% is assumed rather than reported.

Growth

Yellow, with revenue compound growth of 5.6% over three years, 7.2% over five years and 1.9% over ten years. Revenue grew in five of the ten comparable years. EPS compound growth is not available. Next-year EPS estimates show growth of 161.8%, but this rises from a loss-making base, and those estimates have been cut in recent months.

Valuation

Red, because the only assessed metric, the verdict, is bad. Price to free cash flow is 250.9 against a ten-year median of 12.4, a premium of 1925.9%. Price to sales shows a premium of -17.1% and price to book a premium of -38.0%. Current price to earnings and enterprise value to EBITDA are not available because earnings and EBITDA are negative; their ten-year medians are 13.9 and 11.2. The DCF gives 2.66 USD per share at a discount rate of 9.6%, with first-stage growth of 7.2%, terminal growth of 2.5%, and the terminal value making up 54% of the result. The fair value band is 18.20 to 27.30 USD, and the fair value from historical multiples is 42.84 USD. The reverse DCF implies growth of 42.3%, against 7.2% delivered, a gap given as 35.05%. The dividend yield is 5.2%, the forward yield 5.36%, and the payout on free cash flow 1305.3%. The fair value is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target.

Risks

The most serious weakness is the operating loss: interest coverage of -8.36 means the company cannot currently cover interest from operations, so any further deterioration would pressure debt. An Altman Z-score of 0.99 places the company in the distress zone, and a sustained ROIC of -12.1% below a WACC of 7.6% would keep eroding invested capital. The dividend, with a payout of 1305.3% of free cash flow, is not covered by cash generation and could be reduced. A rising share count and falling estimates add pressure. Net debt to EBITDA, current price to earnings, enterprise value to EBITDA, trailing free cash flow conversion and stock-based compensation to revenue are not available. This analysis has no debt maturity schedule and no revenue by segment, and it relies on an assumed tax rate.