Eastern Company (EML) AI Stock Analysis

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Eastern Company

(NASDAQ:EML)

Rating:59Neutral

Price Target:

$25.00

▲( 7.67% Upside)

Eastern Company presents a mixed outlook. Financial challenges include declining net income and inconsistent revenue growth, while a strong cash flow provides some resilience. Technical indicators suggest mild upward momentum, and the stock's valuation appears attractive. The earnings call conveyed strategic efforts and improvements, yet market challenges and declining sales metrics pose ongoing risks.

Eastern Company (EML) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$139.16M

Dividend Yield1.89%

Average Volume (3M)11.95K

Price to Earnings (P/E)9.7

Beta (1Y)1.14

Revenue Growth2.06%

EPS Growth47.43%

CountryUS

Employees1,246

SectorIndustrials

Sector Strength92

IndustryManufacturing - Tools & Accessories

Share Statistics

EPS (TTM)0.32

Shares Outstanding6,146,785

10 Day Avg. Volume8,956

30 Day Avg. Volume11,945

Financial Highlights & Ratios

PEG Ratio>-0.01

Price to Book (P/B)1.21

Price to Sales (P/S)0.00

P/FCF Ratio<0.01

Enterprise Value/Market Cap1.44

Enterprise Value/Revenue<0.01

Enterprise Value/Gross Profit<0.01

Enterprise Value/Ebitda<0.01

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Eastern Company Business Overview & Revenue Model

Company DescriptionThe Eastern Company designs, manufactures, and sells engineered solutions to industrial markets in the United States and internationally. It offers turnkey returnable packaging solutions that are used in the assembly process of vehicles, aircraft, and durable goods, as well as in the production process of plastic packaging products, packaged consumer goods, and pharmaceuticals; designs and manufactures blow mold tools and injection blow mold tooling products, and 2-step stretch blow molds and related components; and supplies blow molds and change parts to the food, beverage, healthcare, and chemical industry. It also offers rotary latches, compression latches, draw latches, hinges, camlocks, key switches, padlocks, and handles, as well as development and program management services for custom electromechanical and mechanical systems; designs and manufactures proprietary vision technology for original equipment manufacturers (OEMs) and aftermarket applications; and provides aftermarket components to the heavy-duty truck market. The Eastern Company was founded in 1858 and is based in Naugatuck, Connecticut.

How the Company Makes MoneyEastern Company generates revenue primarily through the sale of its tobacco products, which is one of its largest revenue streams. The company also derives significant income from its packaging division, providing packaging materials and solutions to a variety of industries. Additionally, its industrial engineering segment contributes to earnings by offering specialized machinery and equipment to clients in various sectors. These diversified operations help the company mitigate risks associated with market fluctuations in individual sectors. Strategic partnerships and distribution agreements further enhance its revenue-generating capabilities, ensuring a steady flow of income across its business divisions.

Eastern Company Financial Statement Overview

Summary

Eastern Company faces challenges with declining net income and inconsistent revenue growth, impacting profitability. While leverage remains moderate, declining equity ratios pose a risk. Strong cash flow generation provides some resilience, but strategic improvements are needed to enhance financial health.

Income Statement

Neutral

The company's income statement shows a significant drop in net income, leading to a negative net profit margin in the TTM period. Despite a positive gross profit margin, revenue growth has been inconsistent, with a recent decline. EBITDA and EBIT margins are positive but have not shown strong growth, indicating pressure on operational efficiency.

Balance Sheet

Neutral

The balance sheet shows a moderate debt-to-equity ratio, suggesting manageable leverage. However, the equity ratio has been declining, indicating a potential risk of over-leverage. Return on equity is negative in the TTM period, reflecting challenges in generating returns for shareholders.

Cash Flow

Neutral

The cash flow statement reveals a substantial operating cash flow, but free cash flow growth has been inconsistent. The operating cash flow to net income ratio indicates strong cash generation relative to earnings, but the free cash flow to net income ratio is concerning due to negative net income in the TTM period.

TTM	Dec 2024	Dec 2023	Dec 2022	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
63.31T	272.75M	273.45M	279.27M	246.52M	240.40M
	Gross Profit
14.19T	67.27M	64.95M	58.62M	56.77M	53.66M
	EBIT
3.23T	20.54M	15.18M	14.17M	17.45M	16.86M
	EBITDA
3.23T	25.68M	21.97M	23.89M	26.64M	23.16M
	Net Income Common Stockholders
-13.35T	14.56M	8.59M	12.30M	16.18M	5.41M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
10.24M	16.06M	9.29M	10.19M	6.17M	16.13M
	Total Assets
232.33M	235.31M	252.04M	261.52M	266.33M	275.53M
	Total Debt
63.18M	56.64M	62.08M	76.40M	82.62M	101.50M
	Net Debt
55.27M	42.62M	53.78M	66.21M	76.45M	85.40M
	Total Liabilities
111.33M	2.14T	119.56M	134.91M	151.73M	171.22M
	Stockholders Equity
121.00M	10.00T>	132.48M	126.61M	114.60M	104.31M
Cash Flow		Free Cash Flow
713.69B	10.84M	20.05M	7.10M	-5.74M	17.59M
	Operating Cash Flow
8.35T	20.55M	26.48M	10.46M	-2.02M	20.69M
	Investing Cash Flow
-7.28M	-8.47M	-5.43M	5.09M	12.62M	-9.11M
	Financing Cash Flow
-6.04M	-4.82M	-22.90M	-11.78M	-20.27M	-13.18M

Eastern Company Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price23.22

Price Trends

50DMA

23.14

Positive

100DMA

25.14

Negative

200DMA

27.43

Negative

Market Momentum

MACD

0.32

Negative

RSI

54.17

Neutral

STOCH

39.58

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EML, the sentiment is Neutral. The current price of 23.22 is above the 20-day moving average (MA) of 22.20, above the 50-day MA of 23.14, and below the 200-day MA of 27.43, indicating a neutral trend. The MACD of 0.32 indicates Negative momentum. The RSI at 54.17 is Neutral, neither overbought nor oversold. The STOCH value of 39.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for EML.

Eastern Company Risk Analysis

Eastern Company disclosed 28 risk factors in its most recent earnings report. Eastern Company reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Eastern Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RCMT	72 Outperform	$169.39M	13.20	42.38%	―	8.53%	-16.64%
ACU	70 Outperform	$146.40M	15.77	9.68%	1.53%	2.56%	-47.22%
HQI	66 Neutral	$129.64M	38.01	5.67%	2.59%	-7.66%	-34.08%
Sector *	64 Neutral	$4.39B	11.81	5.20%	249.38%	3.96%	-12.36%
EML	59 Neutral	$139.16M	9.67	9.10%	1.89%	2.06%	47.43%
PESI	47 Neutral	$188.32M	―	-41.10%	―	-28.62%	-543.45%
TBI	47 Neutral	$169.03M	―	-36.98%	―	-16.76%	-1127.93%

* Industrials Sector Average

Performance Comparison

EML

Eastern Company

22.64

-5.14

-18.50%

ACU

Acme United

38.89

0.16

0.41%

PESI

Perma-Fix

10.84

0.29

2.75%

RCMT

Rcm Technologies

22.92

1.29

5.96%

TBI

Trueblue

5.74

-5.03

-46.70%

HQI

HireQuest

9.25

-3.34

-26.53%

Eastern Company Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: 1.71%|

Next Earnings Date:Aug 12, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mix of strategic advancements and operational improvements, particularly in leadership transitions and share buybacks. However, these positive developments were offset by declines in sales, backlog, and gross margin, as well as challenges in key markets, leading to a balanced outlook.

Q1-2025 Updates

Positive Updates

Strategic Leadership and Board Expansion

Completion of leadership team transition plans and the appointment of Chan Galbato to the Board of Directors, enhancing strategic growth plans.

Share Buyback Program

Completion of a share buyback program with 200,000 shares repurchased, and approval for an additional buyback of 400,000 shares.

Operational Improvements at Big 3 Precision

Completed significant structural changes, including the sale of the ISBM Blow Mold business and closure of the Dearborn facility to improve competitiveness.

Growth in Aftermarket Business

Velvac's aftermarket business grew despite challenging market conditions and tariffs, showcasing resilience and strategic advantage.

Negative Updates

Decline in Net Sales and Backlog

Net sales decreased by 2% to $63.2 million and backlog decreased by 9% to $85.9 million, mainly due to decreased orders for returnable transport packaging products and truck mirror assemblies.

Reduced Gross Margin

Gross margin decreased to 22.4% from 23.9% in the prior year, impacted by higher raw material costs.

Challenges in Truck Markets

Velvac's core market, medium and heavy-duty trucks, experienced significant softness, affecting demand and build rates.

Company Guidance

During The Eastern Company’s First Quarter Fiscal Year 2025 Earnings Call, several key metrics and strategic updates were discussed. The company reported revenues of $63.3 million, a slight decrease from Q1 2024, and an EBITDA of $4.8 million. Earnings per share were $0.31, aligning closely with expectations. Net sales decreased by 2% to $63.2 million, while the backlog declined by 9% to $85.9 million. The gross margin was 22.4%, down from 23.9% in the previous year, primarily due to higher raw material costs. Selling, general, and administrative expenses decreased by 8%, reflecting lower payroll-related expenses, despite a $0.3 million increase in sales commissions. The senior net leverage ratio rose to 1.45 from 1.23 at the end of 2024. The company completed a share buyback of 200,000 shares and announced a new program to repurchase up to 400,000 shares. Moreover, the leadership team transition plans were finalized, and Chan Galbato joined the Board of Directors. The company emphasized strategic growth, operational focus, and supply chain nimbleness as key goals for 2025.

Eastern Company Corporate Events

Executive/Board Changes

Eastern Company Announces New Board Committee Assignments

Neutral

May 6, 2025

On May 1, 2025, The Eastern Company announced new assignments for its board committees. These changes involve key leadership roles across various committees, potentially impacting the company’s governance and strategic direction.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.