Stock Analysis

Eastman Kodak (NYSE:KODK) Shareholders Have Enjoyed An Impressive 183% Share Price Gain

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NYSE:KODK
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When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! Take, for example Eastman Kodak Company (NYSE:KODK). Its share price is already up an impressive 183% in the last twelve months. On top of that, the share price is up 43% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 19% in 90 days). And shareholders have also done well over the long term, with an increase of 42% in the last three years.

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Given that Eastman Kodak didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Eastman Kodak actually shrunk its revenue over the last year, with a reduction of 15%. We're a little surprised to see the share price pop 183% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. It's quite likely the revenue fall was already priced in, anyway.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
NYSE:KODK Earnings and Revenue Growth January 29th 2021

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

We're pleased to report that Eastman Kodak shareholders have received a total shareholder return of 183% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 0.6% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Eastman Kodak better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Eastman Kodak (at least 2 which are a bit concerning) , and understanding them should be part of your investment process.

Eastman Kodak is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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What are the risks and opportunities for Eastman Kodak?

Eastman Kodak Company provides hardware, software, consumables, and services to customers in the commercial print, packaging, publishing, manufacturing, and entertainment markets worldwide.

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Risks

  • Earnings have declined by 26.6% per year over past 5 years

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