International Paper (IP) recently outlined plans to cease preprint operations in Richwood, Kentucky and close three additional converting and sheet plants, a network reshaping move that matters for how investors think about the stock.

The closure plans come after a mixed run for International Paper, with the 1 month share price return of 19.56% and 3 year total shareholder return of 39.38% contrasting with a 1 year total shareholder return that declined 14.26%. This suggests momentum has picked up recently even as longer term holders have seen uneven results.

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With International Paper trading close to its analyst price target and sitting on a large estimated intrinsic discount, the key question is whether recent cost moves leave upside on the table or whether the market is already pricing in future growth.

Most Popular Narrative: 1.5% Undervalued

The most followed narrative pegs International Paper's fair value at $39.36, just above the last close of $38.76, and hinges on a detailed earnings rebuild story.

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. Strategic focus on commercial excellence, including the 80/20 model and improved customer service, is resulting in market share gains in North America and Europe, which should help close the revenue gap with industry peers and lift future earnings.

Want to understand why a modest 1.5% discount still supports a fair value near $40? The narrative leans heavily on margin repair, steadier revenue growth, and a specific earnings profile built using a 7.39% discount rate and a future profit multiple that sits below the wider packaging peer group.

Result: Fair Value of $39.36 (UNDERVALUED)

However, International Paper still faces mill reliability issues that have already reduced profit, as well as ongoing European oversupply and pricing pressure that could weaken the core turnaround argument.

Next Steps

With sentiment on International Paper clearly mixed, it makes sense to move quickly. Test the narrative against the underlying data and form your own judgment by weighing the 3 key rewards and 2 important warning signs

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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.