– Fundamentals improve across the board in recent earnings report
– Catalysts: Massive insider buying on the open market after KODK unveils EV/Energy initiative
– Sentiment: Not just a legacy camera company anymore. EV battery space could be gamechanger
– Technical analysis from Rex Man: Stock could go parabolic beyond the 9s
By StoryTrading
Don’t let the name Kodak fool you. This isn’t your father’s go-to film and camera company anymore. Eastman Kodak Co. (NYSE:KODK) said on its most recent earnings call that it is exploring opportunities in “EV/Energy storage battery material manufacturing.”
The question is whether this new initiative is merely a flash in the pan or part of a new era for a company that’s been an easy target for stock memes and shorting.
Our StoryTrading community has been following KODK closely to understand why it may be time to take a serious look at the company, and our founder Ben Rabizadeh, recently provided an update to Benzinga through the lens of our four pillars: Fundamentals, Catalysts, Sentiment, and Technicals.
Overview
KODK was founded in 1892 by George Eastman and Henry Strong, serving as the dominant provider of photographic film for most of the 20th century. That all changed with the digitization of cameras, which led to KODK filing for Chapter 11 bankruptcy protection in 2012.
The company eventually emerged from bankruptcy after selling a number of its patents and rebranding itself as a global technology company focused on print and advanced materials and chemicals.
But the next generation of the company’s business model has never really come into focus since the demise of photographic film. That is, perhaps, until now.
Fundamentals
Most of the company’s revenues, which totaled $1.1 billion in 2021, still come from traditional printing, followed by digital printing and advanced materials and chemicals. That being said, revenues for advanced materials and chemicals rose 23 percent to $212 million in 2021 from $172 million in 2021.This is the same segment responsible for the company’s new initiative in the EV/Energy space.
Looking at net income, the company swung to a profit of $24 million in 2021, compared with a loss of $541 million in 2020. Cash is also holding strong on the balance sheet with $362 million reported as of December 31, 2021, versus $196 million as of December 31, 2020.
Catalysts
There has been a significant amount of stock purchases of late by insiders. Kennedy Lewis Management, which is tied to KODK Director Darren Richman, purchased approximately 2.7 million shares following the company’s fourth-quarter results March 15.
Days following this insider buying, it was revealed in a filing that KLM’s stake increased by another several million shares to 6.3 million shares or a 7.8% stake. Clearly, this insider has significant conviction that KODK will perform well in the future.
It’s noteworthy that another director, Michael Sileck, has also been buying shares on the open market.
During the company’s fourth-quarter call, Executive Chairman and CEO Jim Continenza discussed new initiatives in KODK’s advance materials and chemicals business. Specially, the “coating of substrates is a critical aspect of manufacturing materials for batteries and Kodak plans to capitalize on its expertise in coating technology to develop opportunities in this area,” as noted in the company’s deck that accompanied its fourth-quarter earnings results.
Sentiment
Investor sentiment has been negative for this company due to its legacy camera business, which investors are not excited about. However, it’s a small leap to speculate that investors will soon change their sentiment as the company enters the EV battery space. This is not just a camera company anymore.
This improved sentiment could be a tailwind for improved valuations.
Technicals
StoryTrading consults with technical expert Rex Man to identify resistance levels and bull targets. Following is his recent chart and analysis on KODK.
Rex Man noted that KODK “can go parabolic beyond the 9s.” You can find more from Rex Man on Twitter.
Summary
The StoryTrading community empowers individuals to make the best-informed trade and investment decisions through a holistic view of stocks based on the four pillars of Fundamentals, Catalysts, Sentiment, and Technicals. Analyzing all four pillars together can also help identify key inflection points.
Recent catalysts for KODK paint a compelling picture, coupled with solid fundamentals, improving sentiment and technicals moving in the right direction.
The question is whether KODK’s focus on the EV battery space will cause a rapid re-rating in the stock. That's for you and the rest of the market to determine. We'll be here to tell the story as events develop!
Disclaimer: The Author has a LONG position in KODK.
