Packaging and materials company International Paper (NYSE: IP) missed Wall Street’s revenue expectations in Q2 CY2026, with sales falling 11.3% year on year to $6.00 billion. Its non-GAAP profit of $0.04 per share was significantly above analysts’ consensus estimates.

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"Our teams delivered strong second quarter results as execution continued to improve across the company," said International Paper Chairman and CEO Andy Silvernail.

Company Overview

Established in 1898, International Paper (NYSE: IP) produces containerboard, pulp, paper, and materials used in packaging and printing applications.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, International Paper’s sales grew at a sluggish 2.5% compounded annual growth rate over the last five years. This was below our standards and is a tough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. International Paper’s annualized revenue growth of 14.2% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

We can dig further into the company’s revenue dynamics by analyzing its most important segment, Industrial Packaging. Over the last two years, International Paper’s Industrial Packaging revenue (containers, displays, bins) averaged 1.2% year-on-year growth. This segment has lagged the company’s overall sales.

This quarter, International Paper missed Wall Street’s estimates and reported a rather uninspiring 11.3% year-on-year revenue decline, generating $6.00 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 5.7% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will face some demand challenges.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

International Paper was profitable over the last five years but held back by its large cost base. Its average operating margin of 4.1% was weak for an industrials business.

Analyzing the trend in its profitability, International Paper’s operating margin decreased by 7.8 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. International Paper’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for International Paper, its EPS declined by 16% annually over the last five years while its revenue grew by 2.5%. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into International Paper’s earnings to better understand the drivers of its performance. As we mentioned earlier, International Paper’s operating margin declined by 7.8 percentage points over the last five years. Its share count also grew by 33.4%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For International Paper, its two-year annual EPS declines of 47.7% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q2, International Paper reported adjusted EPS of $0.04, down from $0.20 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast International Paper’s full-year EPS will flip from negative $0.32 to positive $2.35.

Key Takeaways from International Paper’s Q2 Results

It was good to see International Paper beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed. Overall, this was a softer quarter. The stock traded up 1.8% to $43.41 immediately following the results.

Is International Paper an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).