DCF Studio

    IP · NYQ · Consumer Cyclical

    International Paper Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 22.16

    Market price

    USD 36.64

    Implied upside

    -39.5%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    Value Per Share

    Perpetuity growth
    USD 22.16-39.5%
    Exit multiple
    USD 44.91+22.6%
    Market price
    USD 36.64

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 24.5bnUSD 26.2bnUSD 27.9bnUSD 29.5bnUSD 31.1bnUSD 32.5bnUSD 33.9bnUSD 35.1bnUSD 36.2bnUSD 37.1bn+4.7%
    EBITUSD 1.0bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.5bn+4.7%
    NOPATUSD 844.8mUSD 903.9mUSD 961.9mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bn+4.7%
    Add depreciation & amortisationUSD 2.1bnUSD 2.2bnUSD 2.4bnUSD 2.5bnUSD 2.7bnUSD 2.8bnUSD 2.9bnUSD 3.0bnUSD 3.1bnUSD 3.2bn+4.7%
    Less capital expenditureUSD -1.5bnUSD -1.7bnUSD -1.9bnUSD -2.1bnUSD -2.3bnUSD -2.4bnUSD -2.6bnUSD -2.8bnUSD -3.0bnUSD -3.1bn+8.2%
    Capex, % of revenue6.3%6.5%6.8%7.0%7.3%7.5%7.7%8.0%8.2%8.5%-
    Less increase in working capitalUSD -96.2mUSD -197.6mUSD -194.4mUSD -188.9mUSD -180.8mUSD -170.3mUSD -157.3mUSD -141.9mUSD -124.3mUSD -104.6m+0.9%
    Free cashflow to firmUSD 1.3bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.2bn-0.8%
    Discount factor0.96300.89300.82810.76790.71210.66040.61240.56790.52660.4884-
    Present valueUSD 1.3bnUSD 1.1bnUSD 1.0bnUSD 988.4mUSD 924.8mUSD 859.3mUSD 792.6mUSD 725.6mUSD 659.2mUSD 594.2m-
    Present Value Of The ForecastUSD 9.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.960Reported 0.941, pulled toward 1.0 (Blume)
    Cost of equity8.96%Risk-free + beta x equity risk premium
    Cost of debt6.89%Risk-free + 200bp, the spread for a D rating at -0.0x interest cover, capped at 200bp because one year's cover is too noisy to charge more. Book interest / average debt was lower, at 6.8%.
    Market capitalisationUSD 19.4bn65.3% of capital
    Total debtUSD 10.3bn34.7% of capital, book value as a proxy
    Tax rate16.9%Effective, capped at statutory
    WACC7.84%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 22.16

    56% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 1.8bn
    Less reinvestment at g/ROIC (31.9% of NOPAT)
    USD -570.6m
    Capitalised
    USD 1.2bn
    ROIC (WACC floor)
    7.8%
    Terminal value, undiscounted
    USD 23.4bn
    Terminal value, discounted
    USD 11.4bn
    Enterprise value
    USD 20.4bn
    Less net debt
    USD 9.2bn
    Equity value
    USD 11.2bn

    Exit at 9.9x EBITDA

    Value per shareUSD 44.91

    72% of EV

    Terminal value, undiscounted
    USD 47.0bn
    Terminal value, discounted
    USD 22.9bn
    Enterprise value
    USD 31.9bn
    Less net debt
    USD 9.2bn
    Equity value
    USD 22.7bn

    Spread between methods: 68%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.84%37.6636.9036.1435.3734.61
    6.84%29.3528.7328.1227.5026.89
    7.84%23.1722.6622.1621.6521.14
    8.84%18.4017.9817.5517.1316.70
    9.84%14.6214.2613.8913.5313.17

    Outlined: this model. Green text: above today's price of 36.64. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year3.8%4.6%8.9%
    EBIT margin8.3%4.2%6.3%
    Discount rate-7.8%5.8%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.