International Paper Company (IP): A Bear Case Theory 

We came across a bearish thesis on International Paper Company on Valueinvestorsclub.com by Sarelam34. In this article, we will summarize the bulls’ thesis on IP. International Paper Company’s share was trading at $39.48 as of November 28th. IP’s trailing and forward P/E were 38.15 and 17.95 respectively according to Yahoo Finance.

International Paper Company produces and sells renewable fiber-based packaging and pulp products in North America, Latin America, Europe, and North Africa. IP is trading at a historically rich valuation, with a 2025E EBITDA multiple of 11.2x—nearly three times its historical average and 50% higher than Smurfit WestRock, despite weaker margins and higher leverage.

Bulls anchor their thesis on new CEO Andy Silvernail, highlighting his operational track record at IDEX, a refocused capital allocation strategy, and the perceived pricing power of a concentrated North American containerboard industry.

Silvernail’s 2027 targets envision EBITDA of $5.5–$6.0 billion and a near tripling of free cash flow, driven by both synergies from the DS Smith acquisition and above-market volume growth. However, these projections face severe economic and structural headwinds. U.S. corrugated box shipments have been stagnant for three decades, and IP’s market share has declined from 35% in 2013 to 28% in 2024. The DS Smith acquisition, a $10 billion cross-border deal pursued amid a bidding war, burdens IP with high leverage and complex integration, constraining further M&A. Synergies are uncertain, as historical precedent in containerboard suggests gains are often offset by competitive pressures.

IP’s free cash flow history further undermines optimism. Excluding acquisitions, FCF has averaged $0.7 billion annually over the past three years, yet the company maintains a $1 billion dividend, requiring borrowing in 2025. Aggressive 2027 targets rely on favorable pricing assumptions and unprecedented volume growth, both inconsistent with long-term trends.

Given realistic multiples and base-line earnings, IP shares could trade 40–50% lower, from $25–$30, while upside to $60 reflects already inflated expectations. Market focus may shift from the “Silvernail era” narrative to dividend sustainability and operational reality, especially if economic conditions deteriorate or EBITDA underperforms. Catalysts include likely Q3–Q4 2025 earnings disappointments, prompting revisions for 2026 and skepticism toward 2027 guidance.

Previously we covered a bullish thesis on Avery Dennison Corporation (AVY) by Serhio MaxDividends in May 2025, which highlighted strong operational efficiency, growth in high-value products, and disciplined shareholder returns. The stock has depreciated approximately by 6.30% since coverage as the thesis didn’t fully play out. The thesis still stands as AVY expands digital labeling. Sarelam34 shares a contrarian view on International Paper (IP) but emphasizes Silvernail’s operational transformation and ambitious DS Smith synergies.

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Disclosure: None.