NasdaqGM:EML

Stock Analysis Report

Executive Summary

The Eastern Company designs, manufactures, and sells industrial hardware, security products, and metal products in the United States and internationally.

Rewards

Trading at 34.6% below its fair value

Earnings grew by 27.5% over the past year

Pays a reliable dividend of 1.54%

Risk Analysis

Debt is not well covered by operating cash flow



Snowflake Analysis

Undervalued with solid track record and pays a dividend.


Similar Companies

Share Price & News

How has Eastern's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: EML has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.7%

EML

0.09%

US Machinery

0.3%

US Market


1 Year Return

8.0%

EML

21.3%

US Machinery

18.5%

US Market

Return vs Industry: EML underperformed the US Machinery industry which returned 21.3% over the past year.

Return vs Market: EML underperformed the US Market which returned 18.5% over the past year.


Shareholder returns

EMLIndustryMarket
7 Day3.7%0.09%0.3%
30 Day-0.7%-1.0%1.5%
90 Day12.4%9.6%5.7%
1 Year9.8%8.0%23.6%21.3%21.1%18.5%
3 Year46.3%39.1%39.8%30.9%45.9%36.4%
5 Year83.7%66.2%69.9%49.8%71.4%52.5%

Price Volatility Vs. Market

How volatile is Eastern's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Eastern undervalued compared to its fair value and its price relative to the market?

34.6%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: EML ($28.51) is trading below our estimate of fair value ($43.61)

Significantly Below Fair Value: EML is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: EML is good value based on its PE Ratio (14x) compared to the Machinery industry average (22.1x).

PE vs Market: EML is good value based on its PE Ratio (14x) compared to the US market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate EML's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: EML is good value based on its PB Ratio (1.7x) compared to the US Machinery industry average (2.5x).


Next Steps

Future Growth

How is Eastern forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

10.4%

Forecasted Capital Goods industry annual growth in earnings


In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as Eastern has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.

This is quite a rare situation as 97% of companies covered by SimplyWall St do have past financial data.


Next Steps

Past Performance

How has Eastern performed over the past 5 years?

14.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: EML has high quality earnings.

Growing Profit Margin: EML's current net profit margins (5.3%) are higher than last year (4.3%).


Past Earnings Growth Analysis

Earnings Trend: EML's earnings have grown by 14.9% per year over the past 5 years.

Accelerating Growth: EML's earnings growth over the past year (27.5%) exceeds its 5-year average (14.9% per year).

Earnings vs Industry: EML earnings growth over the past year (27.5%) exceeded the Machinery industry 13.5%.


Return on Equity

High ROE: EML's Return on Equity (12.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Eastern's financial position?


Financial Position Analysis

Short Term Liabilities: EML's short term assets ($113.8M) exceed its short term liabilities ($35.4M).

Long Term Liabilities: EML's short term assets ($113.8M) do not cover its long term liabilities ($140.3M).


Debt to Equity History and Analysis

Debt Level: EML's debt to equity ratio (96.6%) is considered high.

Reducing Debt: EML's debt to equity ratio has increased from 5.9% to 96.6% over the past 5 years.

Debt Coverage: EML's debt is not well covered by operating cash flow (18.3%).

Interest Coverage: EML's interest payments on its debt are well covered by EBIT (15.8x coverage).


Balance Sheet

Inventory Level: EML has a high level of physical assets or inventory.

Debt Coverage by Assets: EML's debt is covered by short term assets (assets are 1.1x debt).


Next Steps

Dividend

What is Eastern's current dividend yield, its reliability and sustainability?

1.54%

Current Dividend Yield


Dividend Yield vs Market

company1.5%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: EML's dividend (1.54%) is higher than the bottom 25% of dividend payers in the US market (1.42%).

High Dividend: EML's dividend (1.54%) is low compared to the top 25% of dividend payers in the US market (3.7%).


Stability and Growth of Payments

Stable Dividend: EML's dividends per share have been stable in the past 10 years.

Growing Dividend: EML's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (21.6%), EML's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

What is the CEO of Eastern's salary, the management and board of directors tenure and is there insider trading?

8.5yrs

Average management tenure


CEO

Gus Vlak (52yo)

3.9yrs

Tenure

US$1,158,481

Compensation

Mr. August M. Vlak, also known as Gus, has been the Chief Executive Officer and President at The Eastern Company since January 1, 2016. Mr. Vlak serves as Managing Director at DM Capital. He has been a man ...


CEO Compensation Analysis

Compensation vs Market: Gus's total compensation ($USD1.16M) is about average for companies of similar size in the US market ($USD1.13M).

Compensation vs Earnings: Gus's compensation has been consistent with company performance over the past year.


Management Age and Tenure

8.5yrs

Average Tenure

61yo

Average Age

Experienced Management: EML's management team is seasoned and experienced (8.5 years average tenure).


Board Age and Tenure

3.9yrs

Average Tenure

68yo

Average Age

Experienced Board: EML's board of directors are considered experienced (3.9 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUS$51,51009 Sep 19
Peggy Scott
EntityIndividual
Role
Member of the Board of Directors
Director
Shares2,041
Max PriceUS$25.24
BuyUS$140,06709 Sep 19
August Vlak
EntityIndividual
Role
Chief Executive Officer
President
Shares5,717
Max PriceUS$24.50
SellUS$022 Mar 19
GAMCO Investors, Inc.
EntityCompany
Shares200
Max PriceUS$28.51
BuyUS$187,59322 Mar 19
GAMCO Investors, Inc.
EntityCompany
Shares42,496
Max PriceUS$29.30
BuyUS$101,16122 Mar 19
Teton Advisors, Inc
EntityCompany
Shares3,700
Max PriceUS$27.70

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • John Sullivan (66yo)

    VP & CFO

    • Tenure: 13yrs
    • Compensation: US$575.07k
  • Theresa Dews

    Secretary

    • Tenure: 13yrs
  • Gus Vlak (52yo)

    President

    • Tenure: 3.9yrs
    • Compensation: US$1.16m
  • Angelo Labbadia (61yo)

    Group Vice President

    • Tenure: 1.9yrs
    • Compensation: US$567.98k
  • Chris Moulton

    Head of Corporate Development & Investor Relations

    • Tenure: 0yrs
  • Nicholas Vlahos

    Treasurer

    • Tenure: 0yrs

Board Members

  • John Everets (72yo)

    Independent Director

    • Tenure: 26.9yrs
    • Compensation: US$32.51k
  • Michael McManus (76yo)

    Independent Director

    • Tenure: 4.6yrs
    • Compensation: US$40.00k
  • Charles Henry (69yo)

    Independent Director

    • Tenure: 30.9yrs
    • Compensation: US$33.27k
  • James Mitarotonda (65yo)

    Independent Chairman

    • Tenure: 3.9yrs
    • Compensation: US$64.89k
  • Peggy Scott (68yo)

    Director

    • Tenure: 0.6yrs
  • Fred DiSanto (57yo)

    Independent Director

    • Tenure: 3.7yrs
    • Compensation: US$47.75k
  • Gus Vlak (52yo)

    President

    • Tenure: 3.9yrs
    • Compensation: US$1.16m

Company Information

The Eastern Company's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: The Eastern Company
  • Ticker: EML
  • Exchange: NasdaqGM
  • Founded: 1858
  • Industry: Industrial Machinery
  • Sector: Capital Goods
  • Market Cap: US$169.121m
  • Shares outstanding: 6.24m
  • Website: https://www.easterncompany.com

Number of Employees


Location

  • The Eastern Company
  • 112 Bridge Street
  • PO Box 460
  • Naugatuck
  • Connecticut
  • 6770
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
EMLNasdaqGM (Nasdaq Global Market)YesCommon StockUSUSDJan 1968

Biography

The Eastern Company designs, manufactures, and sells industrial hardware, security products, and metal products in the United States and internationally. The company’s Industrial Hardware segment offers pa ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/08 23:35
End of Day Share Price2019/12/06 00:00
Earnings2019/09/28
Annual Earnings2018/12/29


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.