Do they have cause? Some on Wall Street think so. Credit ratings agency Fitch last week revised its outlook on Kodak debt from "stable" to "negative," meaning in its eyes investors should shy away from Kodak bonds. Fitch says it does not expect Kodak to generate free cash flow (money left over after a company pays expenses, debt and dividends) anytime soon while its sales and profits slip and while it continues to spend on restructuring and pension liabilities.
And analysts polled by Thomson Reuters expect, on average, that Kodak's quarterly results on Oct. 28 will show sales down and losses up, even while most major companies are reporting improved results.
All pretty grim. But one could argue Kodak stock is a diamond in the rough. Its price/share ratio — the value of all its outstanding stock divided by its 2009 revenues — is about 0.14. In many investing circles, a PSR of less than 1 indicates a value stock the market is overlooking. (For comparison sake, Xerox Corp. has a PSR of 0.65, while Harris Corp.'s is 1.1.)
However, in Kodak's case the low PSR could indicate that investors have almost no optimism in the company's prospects, said Brighton Securities President George Conboy
In recent years, Kodak has been dogged by rumors it is up for sale. Such a takeover — particularly a buyout with the intention of chopping up the company and selling the profitable parts — becomes more plausible when a company's stock price is low, Conboy said. And Kodak stock is doing a limbo right now. Over the past five years, shares have averaged $15.56. But the past two years, the stock has spent most of its time under $6. Shares closed Friday at $4.07, down 5.8 percent for the week.
Coming up: Notable area employers announcing earnings this week include SLM Corp. on Tuesday, M&T Bank Corp. on Wednesday, and Monro Muffler Brake Inc., First Niagara Financial Group and Xerox on Thursday.
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