EK Stock Report

2-Year Price History

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A Word Of Caution

Eastman Kodak Company (EK) has experienced a very significant drop in earnings and/or earnings estimates. In and of itself this drop in earnings could be an indication of greater troubles within the company.

Please take a moment to look at the RazorWire feed on the right hand side of the report to find more information regarding the company's dropoff in performance. Each time Eastman Kodak Co is mentioned on business television recently should be displayed. This helps bring you up to date on any major issues they are facing right now.

Therefore, (and as always), check additional sources and available information regarding EK before making an investment decision.

Ockham's Rating

EK Revenue

As a value investing shop, we are interested in seeing how EK's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 0.75x and the low end of the range at 0.42x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for EK of 0.08x is well below its normal historic Price to Sales levels. At a price of $2.70, EK is 88% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

EK Cash Earnings

EK is not forecasted to produce positive Cash Earnings this year, based on recent performance. This is not a positive situation, as we would always prefer that a company is producing cash every year. However, it is important to recognize that not all companies or types of companies have the goal of producing positive Cash Earnings either early in their business cycle or following significant turnaround changes. When looking at EK, we hesitate to be overly negative on the company, but it is of concern that the company is not profitable at this time. Let's face it, companies cannot remain unprofitable for very long before a change has to be made. This could mean further restructuring or corporate event such as selling assets or spinning off divisions, at any rate a company with negative cash flows is not one that often makes a great investment unless you can acquire it at an extremely depressed price.

EK Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In EK’s case, the estimated annual dividend is $0.50 resulting in a current dividend yield of 18.52%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from EK against the historic high and low levels over the past 10 years. The highest dividend yield from EK over this period was 24.88% while the lowest dividend yield was 1.42% It's hard not to notice that EK pays a current dividend yield that is 40.84% above the historical median. This peaks our interest since our analysis is looks favorably upon dividend yields that are greater than the historical median.