Earnings Preview: Eastman Kodak

Eastman Kodak Company (EK) is slated to report its fourth quarter and fiscal 2010 results on January 26. Analysts following the stock have remained unmoved since the last 60 days as management has reiterated its sales guidance for fiscal 2010 in the range of $7.5 billion to $7.7 billion, same as in the previous year.

Third Quarter Highlights

Kodak reported improved results for the third quarter of fiscal 2010 with a loss per share (excluding one-time items) of 2 cents, down from a loss per share of 23 cents in the year-ago quarter. Reported loss per share was much lower than the Zacks Consensus Estimate of a loss of 31 cents per share. Net loss came in at $5.0 million from a loss of $63 million in the third quarter of fiscal 2009.

Kodak reported sales of $1,758 million, representing a decrease of 1% year over year due to the negative foreign exchange impact of 2%. However, reported sales beat the Zacks Consensus Estimate of $1,614 million. The marginal improvement in the third quarter results was attributable to the gradual market recovery.

For further Details follow the link: Kodak Beats Zacks Estimate

Agreement of Estimate Revisions

None of the analysts covering the stock have moved their estimates in either direction for the last 60 days, which indicates that they are waiting for the fourth quarter and fiscal year results. Fiscal 2010 estimate remained at 38 cents per share.

With respect to earnings surprises, Kodak has missed the Zacks Consensus Estimate twice in the trailing four quarters. However, Kodak has recorded an average earnings surprise of 128.61%, which indicates that Kodak has surpassed the Zacks Consensus Estimate by that measure.

Our Take

Kodak carries out numerous expansion programs and continuously launches new products at competitive prices; which are expected to push growth in the current improving economy.

Kodak expects losses from continuing operations in the range of $50–$150 million, including $102 million in net charges for early extinguishment of debt in the first quarter of 2010. Segment earnings from operations are expected in the range of $350– $450 million and EBIT is anticipated at $275–$375 million. For fiscal 2010, Kodak expects net cash used in operating activities in the range of $50–$150 million and cash & cash equivalents in the range of $1.8–$2.0 billion.

However, Kodak operates in a highly competitive market and encounters aggressive price competition for all of its products and services from numerous companies globally. Kodak’s direct competitors include Canon Inc. (CAJ), Sony Corp. (SNE) and FUJIFILM Holdings Corp. (FUJIY). We are reiterating our Neutral recommendation on Kodak. The stock currently retains a Zacks #3 Rank (short-term Hold rating).

EASTMAN KODAK (EK): Free Stock Analysis Report

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