Eastern Co (EML) stock analysis

P/E above its 5-year median

Eastern's P/E of 17.4 is above its own 5-year median of 16.8.

P/E below the industry

Eastern's P/E of 17.4 is below the Cutlery, Handtools, and General Hardware median of 21.2.

EV/EBITDA above its 5-year median

Eastern's EV/EBITDA of 12.6 is above its 5-year median of 8.4.

P/B below the industry

Eastern's price-to-book of 1.43 is below the Cutlery, Handtools, and General Hardware median of 2.07.

Trading above fair value

The share price of $31.42 is above our fair value estimate of $29.44.

Margin of safety under 20%

The price is 6.7% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -3.8% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -15.9% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 49.9% over the last twelve months, against a 5-year average of 5.7% a year.

Growing slower than the industry

Revenue grew -0.6% over the last twelve months; the Cutlery, Handtools, and General Hardware median is 4.3%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 21.9% over the last twelve months, against 22.8% a year earlier.

Return on equity under 15%

Return on equity was 8.5% over the last twelve months and averaged 4.9% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 5.1%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Eastern's return on equity of 8.5% is below the Cutlery, Handtools, and General Hardware median of 13.6%.

Earnings grew over 5 years

Net income grew 5.7% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 4.3% over the last twelve months, against a 5-year average of 2.3%.

Net margin below the industry

Eastern's net margin of 4.3% is below the Cutlery, Handtools, and General Hardware median of 5.5%.

Low debt

Debt is 29.9% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 85.0% five years ago to 29.9%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 32.1% of total debt.

Interest not well covered

Operating income covers interest expense 4.4 times; we look for at least 5.

Short-term assets cover short-term debts

Current assets are 2.73 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.38; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Eastern paid dividends worth 1.4% of the share price over the last twelve months.

Yield below Treasuries

The 1.4% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Eastern yields 1.4%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 24.3% of net income.

Covered by free cash flow

Dividends take 33.1% of free cash flow.