Eastman Kodak Stock Forecast

Eastman Kodak Stock Price Forecast: For anyone who grew up in the 20th century, the name “Kodak” is synonymous with photography. The Eastman Kodak [NYSE: KODK] company once dominated cameras and film for more than a century after its founding in 1888. By 1976, Kodak was selling 90 percent of photographic film in the United States, as well as 85 percent of the cameras.

Unfortunately, Eastman Kodak [NYSE: KODK] has fallen on hard times recently since filing for Chapter 11 bankruptcy in 2012. Shortly after declaring bankruptcy, the company also announced that it would shutter its product lines in digital cameras, pocket video cameras, and digital picture frames.

What was the problem for Eastman Kodak [NYSE: KODK]?

The company was unable to keep up with the turn away from analog photography and toward digital photography, which first began in the 1980s, while its competitor Fujifilm was more successful. Ironically, Kodak suffered this fate of obsolescence despite the fact that Kodak engineer Steven Sasson was the first to invent the digital camera in 1975.

The question now remains: is Eastman Kodak stock worth the investment right now, or is the company a shell of its former self? Below, we’ll discuss what the future seems to hold for Eastman Kodak [NYSE: KODK].

What Does Eastman Kodak Do Now?

Eastman Kodak [NYSE: KODK] is a technology company that produces a variety of products in the camera and photography spaces.

The company is headquartered in the 19-story Kodak Tower in Rochester, New York and currently employs more than 5,000 people. James V. Continenza has served as Kodak’s CEO since February 2019, taking over after the departure of Jeff Clarke.

Kodak manufactures a broad array of equipment and supplies for both personal and professional photography: cameras, film, printers, scanners, and photographic chemicals.

The company also provides products and services for medical purposes, including radiography, cardiography, dentistry, and oncology.

Kodak’s main competitors are other major corporations in the photography and imaging space, including Xerox, Fujifilm, Canon, and Nikon.

Is Eastman Kodak Stock a Buy?

With all that said, why would investors be looking to buy Eastman Kodak stock in 2019?

At first glance, buying Eastman Kodak stock doesn’t look like much of a smart investment. While it’s had a few brief spikes of interest over the past several years, the trendlines are clear: shares of Kodak stock have continued to steadily decrease in value.

Perhaps the biggest resurgence in Kodak stock came at the beginning of 2018, when the company announced news of its own cryptocurrency KODAKCoin. Shares briefly jumped from $3 to $13 following the announcement, which came during the height of the “crypto bubble.” However, since then the project has stalled and gone past its original release date.

In general, Kodak’s financial profile has not been strong since emerging from bankruptcy in September 2013. Revenues have continued to decline from $2 billion to $1.3 billion in 2018. As a result, in 2018 the company was in the red for both operating income and net income: -$118 million operating income, and -$16 million net income.

What are the Risks of Buying Eastman Kodak?

More bad news for the company? Kodak recently sold its Flexographic Packaging Division to the private equity firm Montagu for roughly $340 million, which became a net $312 million in cash.

However, this was significantly less than the $400 million that the deal was expected to generate. Selling off Flexographic Packaging also gets rid of one of Kodak’s few businesses that was actually turning a profit.

Right now, Kodak seems to have enough trouble just keeping itself afloat. In the recent past, the company has failed to increase its revenue or generate positive cash flow.

That’s not to mention the fact that Kodak will need to pay back $300 million within the next two years – $100 million to repay convertible bonds with an expiration date of 2021, and $200 million to the company’s preferred shareholders.

It’s no wonder that Kodak is expected to have significant liquidity issues in the near future. $146 million of the company’s $240 million in gross cash is held in foreign accounts. According to the company itself, this money “may have high tax costs or other limitations that delay the ability to repatriate, and therefore may not be readily available for transfer to other jurisdictions.”

Eastman Kodak Stock Forecast: Summary

Kodak has struggled to recover ever since losing its footing at the end of the 20th century, and now one of the giants of the photography industry is fighting just to survive.

Unfortunately, the long, inexorable decline of Kodak stock seems unlikely to reverse its course any time soon. The KODAKCoin cryptocurrency project may well be dead in the water, and the company is running out of options for how to shake things up. Kodak’s business lines can barely turn a profit, and the company has been reduced to selling off its own assets to pay its debts.

Investors should be highly cautious of purchasing shares of Kodak stock, especially for those looking to make a short-term profit. A number of market analysts and hedge funds have predicted that Kodak will default in the near future. For these reasons, strong caution is warranted before investors consider buying Kodak stock.

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.