Eastman Kodak Earnings Preview

| About: Eastman Kodak (KODK)

Eastman Kodak Co. (EK) will report its third-quarter 2011 earnings on Thursday, November 3, 2011. The current Zacks Consensus Estimate for earnings per share (NYSEARCA:EPS) is negative 41 cents, representing an annualized loss of 1,950%.

With respect to earnings surprises, out of the trailing four quarters, Kodak underperformed the Zacks Consensus Estimate in three quarters. The average earnings surprise was a negative 900.02%, implying that the company has underperformed the Zacks Consensus Estimate by the same magnitude over the last four quarters.

Second Quarter Highlights

On July 26, Eastman Kodak Company reported its financial results for the second quarter of 2011, with loss from continuing operations of $0.67 a share compared with a loss of $0.62 in the year-ago comparable quarter. The loss incurred during the quarter was higher than the Zacks Consensus Estimate loss of $0.59 per share.

The year-over-year earnings decline was primarily attributable to the rising raw material costs of silver and aluminum and investments to drive digital growth initiatives.

Kodak reported total net sales of $1,485 million, down 5% year over year. The year-over-year decline was primarily attributable to the increased raw material costs as well as industry related volume decline.

Agreement of Estimate Revisions

In the last 30 days, none of the analysts increased or decreased their earnings per share (EPS) estimates for the third quarter, as there was no catalyst for such change.

Furthermore, for FY11, none of the analysts increased or decreased their earnings per share (EPS) estimates.

Magnitude of Estimate Revisions

Estimates over the last 30 days remained intact at a negative 41 cents per share for third-quarter 2011, representing a year-over-year loss of 1,950%.

Estimate for fiscal 2011 remained static at a negative $2.43 over the last 30 days while that for fiscal 2012 showed a similar trend at ($1.29). These estimates represented a year-over-year loss of a negative 5,981.25% for 2011 and a growth of 47.11% for 2012.

Our Take

We believe that the company’s steady stream of product launch and promotions, along with proactive investments in priority business fields will certainly push forward the revenue growth, thereby posting improved financial results for the third quarter of 2011.

Kodak’s investment strategies in digital growth businesses are also expected to raise market share trend and induce growth. However, surge in raw material prices and the exposure to volatile products remain a matter of concern for the stock.

Based in New York, Kodak provides imaging technology products and services to the photographic and graphic communications markets across the globe. The company directly competes with its peers such as Canon Inc. (NYSE:CAJ), Sony Corporation (NYSE:SNE) and Fujifilm Holdings Corporation.

See also Eastman Kodak (EK) free Stock Analysis Report