Stock Report for Eastman Kodak Company (EK)
  • Trade Alert for Eastman Kodak Company (EK)
  • Stock Alert for Eastman Kodak Co. (EK)
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    Stock Alert for Eastman Kodak Company (EK)

    Eastman Kodak Company (EK) engages in the sale of imaging products, technology, solutions and services to consumers, businesses and professionals. The Company’s products span digital still and video cameras and related accessories; consumer inkjet printers and media; digital picture frames; retail printing kiosks; APEX drylab systems and related media and services; and KODAK Gallery online imaging services. EK’s products also include prepress equipment and consumables; imaging sensors; workflow software and services electro-photographic printing equipment, consumables and service; commercial inkjet printing equipment, consumables and service, and document scanners.

    Share Statistics (12-Sept-11)   FY

    2009

    FY

    2010

    %

    Chg

    Q2

    2010

    Q2

    2011

    %

    Chg

    Symbol EK Revenue, $Mn 7.61B 7.19B -5.5% 1.56B 1.49B -4.5%
    Current price $2.78 Gross marg. 23.2% 27.1% 16.8% 19.5% 14.2% -27.2%
    52wk Range: $1.75-$5.95 Oper. margin -6.1% -11.7%
    Avg Vol (3m): 13,952,800 Net margin -2.8% -9.6% 242.9% -10.8% -12.1% 12.0%
    Market Cap. 747.96M              
    Shares Outstanding 269.05M EPS, $ 0.04 -0.60 -1600.0% -0.59 -0.53 -10.2%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares in EK dropped 14.2% in the last five days, but the stock rose 34.3% in the last month. Year to date, the stock is down 28.2%.

    Shares of the EK dropped as much 6% on Monday after Jim Cramer on Friday made a bearish call on the stock. “No. Everyone wants to play the patent play. I don’t like it. I think it’s so overvalued,” Cramer stated in his “Lightning Round” program.

    Over the weekend, Seeking Alpha published an article about the possibility that the company is heading for bankruptcy. The report noted the Company’s huge annual losses and growing debt-load, in contrast with its market cap of just $780 million.

    For the second quarter of this year, EK reported results that reflect continued momentum of its core digital growth businesses, increased raw material costs, continued investment in certain growth businesses, and cash performance which reflects the Company’s seasonal pattern.

    Second-quarter sales were $1.485 billion, a 5% decrease from the year-ago quarter. Digital revenue was $1.089 billion, consistent with the year-ago quarter. Revenue from the Company’s core digital growth businesses – Consumer and Commercial Inkjet, Packaging Solutions, and Workflow Software & Services – increased 22%, fueled by a 48% revenue growth in Consumer Inkjet printers and ink.

    Revenue from the Company’s Consumer Digital Imaging Group decreased 8%, reflecting planned lower sales of digital cameras, as the Company implements its previously announced strategy in this business to trade top-line growth for improved full-year profitability. Second-quarter revenue from the Company’s Film, Photofinishing and Entertainment Group declined by 14%.

    On the basis of U.S. generally accepted accounting principles (GAAP), the Company reported a second-quarter loss from continuing operations of $179 million, or $0.67 per share, compared with a loss from continuing operations on the same basis of $167 million, or $0.62 per share, in the year-ago period. The year-over-year earnings decline was largely the result of rising raw material costs, particularly silver and aluminum, as well as investments to drive digital growth initiatives, particularly in Commercial Inkjet.

    Non-operational items of net expense in the second quarter of 2011 totaled $12 million after tax, or $0.05 per share, primarily due to tax-related items, restructuring charges, and corporate components of pension and other post-employment benefit costs. Non-operational items of net expense in the second quarter of 2010 totaled $9 million after tax, or $0.03 per share, primarily due to legal contingencies, restructuring charges and corporate components of pension and other post-employment benefit costs.

    Second-quarter 2011 cash usage, before restructuring payments, was $332 million, a $162 million increase from the year-ago quarter, reflecting the Company’s seasonal pattern, the timing of intellectual property transactions and previously disclosed UK pension contributions. This corresponds to net cash used in continuing operations from operating activities on a GAAP basis of $322 million in the second quarter, compared with net cash used in continuing operations from operating activities on a GAAP basis of $173 million in the second quarter of 2010.

    EK held $957 million in cash and cash equivalents as of June 30, 2011.

    2011 Outlook

    For the current year, EK expects loss from continuing operations in the range of $200 million to $400 million, compared to its previous forecast of a loss in the range of $100 million to $300 million.

    The Company anticipates a year-end cash balance of $1.6 billion to $1.7 billion, after taking into account all cash actions. It previously forecast a year-end cash balance of $1.7 billion to $1.8 billion.

    EK continues to expect $250 million to $350 million in cash this year from intellectual property licensing transactions, as well as proceeds from sales of non-core assets totaling $300 million to $400 million.  This forecast does not include any revenue or cash flow from the previously announced exploration of strategic alternatives for its digital imaging patent portfolios, nor does it include any potential outcomes from intellectual property litigation currently before the U.S. International Trade Commission.

    Source: http://www.kodak.com/ek/US/en/Kodak_Reports_Second_Quarter_2011_Results_Key_Growth_Businesses_Continue_to_Gain_Momentum.htm

    Financial Strength (12-Sept-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 1.00 0.71 1.10 0.76
    Current Ratio (MRQ) 1.38 1.04 1.33 1.12
    LT Debt to Equity (MRQ) 30.72 55.64 110.67
    Total Debt to Equity (MRQ) 59.08 97.16 148.82
    Interest Coverage (TTM) 4.09 0.00 0.32 23.29

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    Analyst Recommendations and Revisions

    1-5 Linear Scale

    Current

    1 Month
    Ago

    2 Month
    Ago

    3 Month
    Ago

    (1) BUY 0 0 0 0
    (2) OUTPERFORM 1 1 1 1
    (3) HOLD 2 2 2 3
    (4) UNDERPERFORM 0 0 0 0
    (5) SELL 3 3 3 2
    No Opinion 0 0 0 0
     
    Mean Rating 3.83 3.83 3.83 3.50

    Source: http://www.reuters.com/finance/stocks/analyst?symbol=EK.N

    Consensus Estimates Analysis

    # of Estimates

    Mean

    High

    Low

    1 Year Ago

    SALES (in millions)
    Quarter Ending Sep-11 3 1,648.30 1,752.89 1,510.00 1,623.35
    Quarter Ending Dec-11 3 1,877.73 1,953.19 1,756.00 2,147.45
    Year Ending Dec-11 4 6,434.12 6,737.40 6,073.00 6,854.85
    Year Ending Dec-12 3 6,429.01 7,020.80 5,991.00 6,360.00
    EARNINGS (per share)
    Quarter Ending Sep-11 4 -0.43 -0.23 -0.54 0.02
    Quarter Ending Dec-11 4 -0.11 0.08 -0.27 0.28
    Year Ending Dec-11 6 -2.01 -0.26 -2.62 -0.24
    Year Ending Dec-12 5 -0.83 0.44 -1.38 0.37
    LT Growth Rate (%) 1 10.00 10.00 10.00 10.00

    Technical Analysis

    Source: http://stockcharts.com

    EK is within its Bollinger Bands. This is a normal condition suggesting that it is neither overbought nor oversold relative to the recent price action.

    EK’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9day moving average or signal line. This suggests that positive momentum has begun to slow.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Sept12-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Canon Inc. CAJ 43.64 53.05B 16.59 14.36 1.08 1.05
    Sony Corp. SNE 19.13 19.20B 19.13 12.26 0.22 0.20
    FUJIFILM Holdings Corp. FUJIY 22.78 10.97B 14.06 9.53 0.41 0.40
    Photographic Equipment & Supplies Median       18.20 n/a 1.14 n/a
    Eastman Kodak Company EK 2.76 742.58M n/a n/a 0.12 0.12

    Source: Thomson Financial

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