The Company manufactures and sells industrial hardware, security products, and metal products from four U.S. operations and six wholly-owned foreign subsidiaries. It operates in three segments: Industrial Hardware, Security Products, and Metal Products.
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Eastern Company is what I think may become one of those stealthy blue chips like Hansen Natural or Pool Inc. They have strong management, good inside ownership, low debt, and it's highly profitable. What else could a value investor ask for?
Based on my valuation work, I see these shares at about $53-$54 each. If they keep up their diligent efforts of corporate responsibility and consideration for their shareholders, this could easily become a 7 to 10 bagger over the next 10 years.
As I note in my own pitch..."A nice company that keeps its head down and goes to work, probably a great company to work for. No history of caring much about Wall St. If you read the SEC filings, you'll see that the big profits have come and gone with a military contract. A new military contract would probably cause a profit repeat, but there is no sign of this. Generally, the company makes a little dough, feeds itself well, pays a fair dividend when the stock is properly priced at historical levels, where annual earnings are 70 or 80 cents per share. Buy it for the dividend at ten or twelve bucks, but if you are looking for a sustained profit increase, look no further than the 10K...unless they announce a new military contract."Latest earnings announcement is bearing out. What everybody is missing is the history of this company. It had sudden and stellar earnings, which brought big volume to a small stock, driving the price very high. It seems to take a while for folks to accept the fact that it isn't happening again, at least not soon. I certainly wouldn't say they'll never repeat, but the price of the stock is way above current earnings and I would suggest there should be low expectations for at least the next few quarters. Bottom line, they announced earnings of .20 for the quarter...that looks a lot like the .80 net annual earnings for 2005, wouldn't you say?
Now would be the time to buy in...though if the pendulum swings as it usually does, we'll see further declines before it heads back up, possibly to the 11s. But there just isn't any interest in this stock...and it's not CAPS ratable now either, which is unfortunate.EML had a temporary profit boost from some defense work. If they get more (seems likely, but it's a long time coming), we'd see a repeat back up. Otherwise, it's probably a good stock for the dividend in this environment. It's been a slow steady grower, off of radar. My guess is that it will stay off radar. Management seems to care more about what they are doing rather than what Wall St thinks. Hooray for that.-lotb