Can Eastman Kodak Come Back in 2012?
With 2012 just beginning, now's a smart time to gauge how the stocks you're interested in are likely to do this year and beyond. By knowing what stock analysts and fellow investors expect from a stock, you'll be smarter about whether you should keep buy it for your portfolio -- or sell it if you already own it.
Today, let's take a look at Eastman Kodak (NYS: EK) . As I discussed in more detail last month, the well-known camera and film company has fallen on hard times recently. But is Kodak simply going through the motions right now, or is it taking the right steps to try to recover from its 2011 slump? Below, I'll take a closer look at what people expect from Kodak and its rivals.
Forecasts on Eastman Kodak
|Median Target Stock Price||$1.00|
|Fiscal 2011 EPS Estimate||($2.48)|
|Fiscal 2012 EPS Estimate||($1.56)|
|Expected Annual Earnings Growth, Next 5 Years||(12%)|
|CAPS Rating (out of 5)||*|
Source: Yahoo! Finance. NM = not meaningful due to negative expected earnings.
What's in store for Kodak in 2012?
Many people have written off Kodak. But the company actually has some positive prospects that could help it come back from its horrible performance in 2011.
One promising area is digital printing. In December, Kodak noted that its commercial printing business has grown substantially. In addition, jobs that customers had previous done with traditional methods, such as high-speed direct mail printing, have now started to go digital. With digital printing making up only a tiny fraction of the total print production market, Kodak has plenty of room to grow in the space.
But Kodak will face strong competition from established players in printing. Hewlett-Packard (NYS: HPQ) has kept control of the industry with its relatively cheap printers. Meanwhile, Xerox (NYS: XRX) is also trying to stake its claim in the space, although its cheaper ink hasn't overcome the higher costs of its printers in trying to stand up to HP.
In addition, morale may be a problem for Kodak. Longtime employees have been quoted saying that they're having trouble staying optimistic about the company's future, with credit downgrades and bad financial news taking their toll.
A lot is riding on how Kodak's patent infringement lawsuits against Apple (NAS: AAPL) and Research In Motion (NAS: RIMM) turn out. Although an initial ruling went partially in Kodak's favor, the U.S. International Trade Commission recently delayed making a decision on the case until this September. The delay could push Kodak toward trying harder to work out a licensing deal with Apple and RIM rather than waiting for a final decision.
Overall, sentiment about Kodak looks very negative for 2012 and beyond. But with the stock trading well below $1 per share, there's a lot of upside if Kodak can get its act together and find some success again.
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At the time this article was published Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.
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