Movement of Eastman Kodak Company (EK) stock remained unclear following the first quarter earnings release on April 29. Half of the analysts covering have revised estimates upward while the other half have revised downward.
First Quarter Highlights
Although Eastman Kodak missed the Zacks Consensus Estimate by 50 cents, the company reported an EPS of 40 cents from a loss per share of $1.34 in the year-ago quarter.
First-quarter sales were $1.933 billion, a 31% increase from the year-ago quarter, including 3% from a favorable foreign exchange impact based on increase in revenue from all segments except from the Film, Photofinishing and Entertainment Group.
(Read our full coverage on this earnings report: Eastman Kodak Underperforms)
Agreement of Analysts
Out of the 5 analysts covering the stock, 2 have raised their estimates for 2010 in the last 30 days, while 2 have lowered them. The first quarter results were a main reason for analysts to raise their estimates. However, a highly competitive environment together with insignificant improvements in the economic conditions pushed the other half to lower their estimates for the upcoming year.
For the following year, analysts remained unmoved by the improved quarter and have maintained their estimates.
Magnitude of Estimate Revisions
Based on the strong movement among analysts who raised their estimates over the past 30 days, the Zacks Consensus estimate is up 9 cents for the upcoming quarter.
Zacks Rank
Eastman Kodak operates in a highly competitive environment and is exposed to a volatile market, which poses immense risks. The company also faces integration and other risks related to acquisitions, strategic alliances, joint ventures, divestitures and outsourcing of transactions. Moreover, a huge dependence on third party manufacturers and external suppliers impacts both top line and bottom line results. Thus, we reiterate our Underperform rating on the stock.
However, our short-term rating remains Hold, which is translated into a Zacks #3 Rank based on its numerous expansion and cost-cutting programs, which will enable it to grow despite the difficult environment. Kodak has also been continuously launching new products, which is encouraging.
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at http://www.zacks.com/education/
Read the full analyst report on “EK”
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