greenwave3 (54.18)

Say cheese to Kodak?

January 31, 2009 – Comments (1) | RELATED TICKERS: EKDKQ

In today's market conditions of rapidly diminishing consumer confidence and corporate profits, one sell-off caught my eye this week.

Shares of Eastman Kodak (EK) dropped 30% Thursday and another 10% on Friday. Ordinarily I would avoid discretionary consumer stocks like the plague, but Kodak currently has almost twice as much cash as it's market cap, as well as reasonably low debt levels.

What is going on here?

At a market cap of around $1.2B (see Yahoo! Finance and Google Finance for the correct market cap -- the figure listed on the Fool is too high), this one-time monster is really looking like a value stock. The current dividend boasts an 11% yield, although I do expect the company to reduce or cut the dividend altogether. Even still, I believe there is a strong value proposition to the ownership of EK at these levels. I expect a major turnaround once consumer electronics and digital printing markets recover, but at its current market cap, Kodak is ripe for a takeover. The liquidation value of the company far exceeds the market cap, and I do not foresee a bankruptcy in this instance. A worst case scenario would be the divesting of manufacturing operations and the re-introduction of the company as in IP / technology-based operation. 

Any Foolish thoughts?

Nathan