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 35.7% below its fair value

Earnings grew by 27.5% over the past year

Pays a reliable dividend of 1.57%

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

-2.4%

EML

-1.6%

US Machinery

0.06%

US Market


1 Year Return

5.8%

EML

10.0%

US Machinery

19.4%

US Market

Return vs Industry: EML underperformed the US Machinery industry which returned 10% over the past year.

Return vs Market: EML underperformed the US Market which returned 19.4% over the past year.


Shareholder returns

EMLIndustryMarket
7 Day-2.4%-1.6%0.06%
30 Day-9.4%-2.6%1.1%
90 Day2.5%2.2%8.9%
1 Year7.6%5.8%12.0%10.0%21.9%19.4%
3 Year51.6%44.1%36.7%28.1%48.9%39.3%
5 Year55.5%41.5%61.6%42.6%71.9%53.1%

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?

35.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: EML ($28.09) is trading below our estimate of fair value ($43.68)

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 (13.8x) compared to the Machinery industry average (21.4x).

PE vs Market: EML is good value based on its PE Ratio (13.8x) compared to the US market (18.3x).


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 (2.2x).


Next Steps

Future Growth

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

10.6%

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 1.5%.


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?

1.57%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Eastern before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.6%marketbottom25%1.4%markettop25%3.7%industryaverage2.0%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: EML's dividend (1.57%) is higher than the bottom 25% of dividend payers in the US market (1.43%).

High Dividend: EML's dividend (1.57%) 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

How experienced are the management team and are they aligned to shareholders interests?

8.6yrs

Average management tenure


CEO

Gus Vlak (52yo)

4.1yrs

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 ($USD1.16M) is about average for companies of similar size in the US market ($USD1.11M).

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


Leadership Team

NamePositionTenureCompensationOwnership
August Vlak
President4.1yrsUS$1.16m0.28% $486.3k
John Sullivan
VP & CFO13.2yrsUS$575.07k0.48% $839.5k
Christopher Moulton
Head of Corporate Development & Investor Relations0yrsno datano data
Theresa Dews
Secretary13.2yrsno datano data
Nicholas Vlahos
Treasurer0yrsno datano data
Angelo Labbadia
Group Vice President2.1yrsUS$567.98kno data

8.6yrs

Average Tenure

61yo

Average Age

Experienced Management: EML's management team is seasoned and experienced (8.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
August Vlak
President4.1yrsUS$1.16m0.28% $486.3k
John Everets
Independent Director27.1yrsUS$32.51k1.89% $3.3m
Michael McManus
Independent Director4.8yrsUS$40.00k0.20% $345.4k
Charles Henry
Independent Director31.1yrsUS$33.27k1.03% $1.8m
James Mitarotonda
Independent Chairman4.1yrsUS$64.89k0.15% $264.2k
Peggy Scott
Director0.8yrsno data0.048% $84.6k
Fredrick DiSanto
Independent Director3.8yrsUS$47.75k0.20% $354.6k

4.1yrs

Average Tenure

68yo

Average Age

Experienced Board: EML's board of directors are considered experienced (4.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

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


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

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$176.045m
  • 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 passenger restraint and vehicular locks, latches, hinges, mirrors, mirror-cameras, light-weight sleeper boxes, and truck bodies for tractor-trailer trucks, specialty commercial vehicles, recreational vehicles, fire and rescue vehicles, school buses, military vehicles, and other vehicles. This segment also provides fasteners and other closure devices. The company’s Security Products segment offers engineered and standard closing and locking systems, including vehicular accessory locks, cabinet locks, cam locks, electric switch locks, tubular key locks, and combination. Its products also include timers, drop meters, coin chutes, money boxes, meter cases, smart cards, value transfer stations, smart card readers, card management software, and access control units. In addition, this segment provides coin acceptors and other coin security products for the commercial laundry markets; and circuit boards and other electronic assemblies to various industries, including measurement systems, semiconductor equipment manufacturing, and industrial controls, medical, and military products. The company’s Metal Products segment offers expansion shells to support the roofs of underground mines; and specialty malleable and ductile iron castings. This segment’s products include mine roof support anchors, couplers for railroad braking systems, support anchoring for construction, and couplers/fittings for utility industries. The company sells its products to original equipment manufacturers, distributors, and sales representatives. The Eastern Company was founded in 1858 and is based in Naugatuck, Connecticut. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/19 00:12
End of Day Share Price2020/02/18 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.