Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, photography products specialist Eastman Kodak (NYSE: EK ) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Eastman Kodak's business and see what CAPS investors are saying about the stock right now.
Eastman Kodak facts
||Rochester, N.Y. (1880)
||Chairman/CEO Antonio Perez
President/COO Philip Faraci
|Return on Capital (Average, Past 3 Years)
||$957 million / $1.45 billion
||Canon (NYSE: CAJ )
Hewlett-Packard (NYSE: HPQ )
Sony (NYSE: SNE )
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 40% of the 702 members who have rated Eastman Kodak believe the stock will underperform the S&P 500 going forward. These bears include robertshrestha and TrojanFan.
Just last week, robertshrestha listed several of Eastman Kodak's negatives: "Dying traditional film business, no competitive advantages in digital, significant debt load = unfavorable turnaround bet. I'll pass."
Over the next five years, in fact, Eastman Kodak's bottom line is expected to decline 12% annually. Meanwhile, rivals Canon, HP, and Sony are expected to grow at rates of 8%, 9%, and 84%, respectively.
CAPS member TrojanFan elaborates on the bear case:
Lots not to like about this business.
They are obviously in a dying business with the proliferation of digital cameras and smartphones displacing the need for film.
Their margins are razor thin and they have negative operating cash flow and EBITDA. They have lots of cash, but at the rate they are burning is they'll be lucky if it lasts to the end of the year.
They have been lucky enough to tap the debt markets to plug their operating deficits, but I'm not sure how long they will be able to do that. ...
Reorganization is the likely path for this company if not an outright liquidation. I'm not sure that the equity will fair very well in that scenario because of all the debt that will likely be in front of them when the company probably files for Chapter 11 a few years hence.
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