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Well, Eastman Kodak (EK) is having one picture-perfect trading session. At the time of this writing, shares of the photography concern, whose colleagues include Canon (CAJ) and Sony (SNE), were up over 16% on high volume. Yes, it's Kodak I'm talking about, the low-priced equity that many have written off as an investment idea. The reason for all the buying action? Fourth-quarter numbers. Were they that good?
Sales increased 6%. On a GAAP basis, Kodak made $1.36 per share from continuing operations. This compares to a loss of $3.40 per share booked in the year-ago period. According to Reuters, the non-GAAP number was $1.08 per share, beating the estimate of 18 cents by what is obviously a very wide margin.
There's a lot of good news throughout the press release. It's apparent that much improvement has been achieved by the management team. Cash flow is better, gross margin has expanded, and the company's digital businesses have grown.
Kodak benefited from all of its various restructuring initiatives. Indeed, the company wants to position itself for the future by adapting for the times while leveraging its iconic trademark.
So, should I come away from this report with a bullish outlook on the stock?
In a word: no.
Yeah, Kodak's stock may be higher today (heck, I see it's even higher as I write this particular sentence than when I first began this piece), but as far as I'm concerned, this is a signal to take profits, especially if one was doing some short-term speculating in the shares. This is a turnaround situation, and they can be extremely tricky to predict.
I just can't ditch my bearish stance on this news, no matter how Wall Street is treating Kodak this afternoon. To those of you who want to risk capital on this trade, best of luck to you, I hope it works out. I'll stay on the sidelines.
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
1-29-2010 @ 1:50AM
des946 said...
Gosh, wasn't it just a short time ago that there were many projections about Kodak supposedly being headed for bankruptcy?
There is simply no integrity to a lot of the market information and projections. It appears that a lot of the market info is nothing more than propaganda used to run the markets up and down so that the insiders can rake off the investors via phoney market manipulations.
1-29-2010 @ 5:13AM
al coholic said...
Comparisons with last year are virtually meaningless. If the Detroit Lions went from winning one game a year ago to two the next would it be reason to jump on their bandwagon? If a runner improved his time by 20% wouldn't the real question be how good was the first time?