International Paper (IP) Stock Down After IRS Proposed New Tax Rules

NEW YORK (TheStreet) -- Shares of International Paper Co  (IP) are down 4.94% to $51.08 on heavy volume in Tuesday's trading session, after the IRS proposed a new tax rule for packaging companies.

Under the new rule, processing of timber includes making sawdust, untreated lumber and woodchips. This would make the tax break unavailable after chemicals or foreign substances are added and it's turned into paper, pulp and plywood, Bloomberg reports.

Packaging companies will not be able to separate their containerboard operations into tax-advantaged vehicles, Bloomberg added.

As of 3:43 p.m. ET today, about 8.74 million shares of International Paper have exchanged hands, compared to its average daily volume of about 2.69 million shares. 

Memphis, TN-based International Paper is a paper and packaging company that operates in three segments including industrial packaging, printing papers, and consumer packaging.

The company operates roughly 25 pulp, paper and packaging mills, 181 converting and packaging plants, 18 recycling plants and three bag facilities in the U.S.

Insight from TheStreet's Research Team:

International Paper is a part of the portfolio. Here is what Bryan Ashenberg and Bob Lang, Portfolio Co-Managers, had to say about the stock in a recent alert:

This morning, model portfolio holding International Paper (IP:NYSE) reported modestly positive first-quarter results. The shares were recently trading at $53.12, off a fraction on the day.

The company reported operating earnings per share (EPS) of $0.84, ahead of consensus estimates of $0.80. Negative foreign currency exposure hurt earnings to the tune of $0.04 in the quarter. Revenues declined 3.6% year over year to $5.52 billion, below the $5.82 billion consensus estimates. The company generated $938 million in EBITDA in the first quarter, up from $906 million a year ago.

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