EASTMAN KODAK CO (KODK) stock intrinsic value fair value estimate & owner earnings analysis

Kodak (Rochester, NY) makes offset printing plates and Prosper inkjet presses, sells consumables and software to commercial printers and publishers, produces motion picture and industrial film and specialty chemicals, and licenses its brand. Revenue fell from $1,386M in 2017 to $1,069M in 2025 as demand for plates and other print products shrank; the first half of 2026 was better ($576M versus $510M, with gross margin 24.1% versus 19.0% and operating income of +$14M versus -$18M). Value here rests on a thin, unreliable earnings stream plus a cash cushion, and the cushion is largely spoken for by lenders and a preferred holder. How we measure earnings. We start from cash from operations, then remove working-capital swings and subtract stock compensation (a real cost) and the part of capital spending needed just to stand still. On that basis Kodak's owner earnings were negative in nine of the last ten years (2016-2025); only 2023 was positive, at $4M. FY2025 reported cash from operations of $480M, but $618M of that was a one-time cash reversion from the overfunded Kodak Retirement Income Plan, and Kodak paid a one-time $153M federal excise tax on it; without both, 2025 operating cash flow was about $15M and owner earnings about -$14M. We left the cash-flow line for changes in liabilities other than borrowings and trade payables in earnings, because it was negative in nine of ten years and so is a recurring cash drain rather than timing noise. Because debt is valued separately below, we add cash interest back and measure the cash the business earns before paying lenders: about -$60M to -$76M a year in 2016-2017, -$45M to -$73M in 2018-2022, +$30M in 2023, -$80M in 2024 and +$6M in 2025. We anchor on 2023-2025, the period after the July 2023 refinancing, when the cost structure was closest to today's; the median business cash flow for those years is +$6M a year. Older years describe a larger business with heavier legacy costs. Growth credited. Business cash flow rose from -$80M in 2024 to +$6M in 2025. The base case starts year 1 at $22M, above that trailing level, for two dated reasons: the first half of 2026 (reported August 4, 2026) showed operating income $32M better than the first half of 2025, with both quarters improving, and the restructuring completed in 2025 (a $21M charge) is expected to save about $23M a year, most of it in effect by end-2026. We give no credit for revenue growth, new products or market recovery: revenue has trended down and past cost programs did not produce lasting positive owner earnings (nine of ten years were negative), so we placed the base midway between the proven $6M and the roughly $38M pace implied if the first-half gain simply held for a full year. We tried to break this: selling and administrative costs rose $15M in the first half of 2026 (stock compensation alone was $14M versus $5M for all of 2025), so the gain came from gross profit, not overhead. The first-half gain is already net of that higher stock compensation. Base case: $22M a year for ten years, then fading to zero over the next ten as the print business shrinks. The business is worth about $207M ($2.01 a share). Net of claims (below), that leaves about $196M, or $1.91 a share. Bear case: the 2016-2022 pattern (losses of $45M-$76M a year, and -$80M in 2024) returns at a milder -$30M a year for two years, after which nothing we can point to keeps producing cash and the business is worth nothing. The business is worth -$55M. After claims that leaves about -$66M, or -$0.64 a share: in this case Kodak owes more than it is worth, by roughly $66M, and the term loan (due August 15, 2028) and the preferred redemption (June 11, 2029) would have to be met partly from cash the business needs to operate. Bull case: the first-half 2026 gain holds for a full year ($38M in year 1) and the rest of the announced savings arrive, giving $50M a year from year 2 (the $6M anchor, plus the $32M first-half gain, plus about $12M of announced savings not yet visible in first-half results), held for ten years and then fading over ten. The business is worth about $459M ($4.47 a share); after claims about $448M, or $4.36 a share. What Kodak owes. Of the $317M in cash and short-term investments at June 30, 2026 ($290M cash and $27M short-term investments), we count $212M, holding back $105M because about that much sits in foreign subsidiaries to run local operations (the filing says $106M was held outside the U.S. at year-end 2025) and the term loan requires $50M-$80M of minimum liquidity. Borrowings are $110M, mainly term loans at 12.5% (7.5% in cash, 5% in cash or added to principal), down from $200M at year-end 2025 after two $50M prepayments required by a March 2026 amendment; because that costs about 6.5 points more than our 6% rate for roughly two years, we add $13M, for $123M. The Series B preferred stock, all held by the term-loan lenders, must be redeemed at $100 a share ($100M) on June 11, 2029 and pays a 6% cash dividend meanwhile; it converts to common at $10 a share, far above any value here, so we treat it as a $100M claim ahead of common. Claims of $223M against $212M of usable cash leave the common $11M short before any business value, in every case. Per share amounts use 102.8M diluted shares. We give no separate value to the newly funded $256M employee cash-balance pension trust, to other investment assets from the reversion still being redeemed through 2027-2028, or to the pension surplus reported on the balance sheet. The second-quarter 2026 report was available to us only as summary data, so we could not read its cash flow statement line by line. Change from our prior view (August 2026). Our earlier base of $2.81 assumed $20M a year of owner earnings that Kodak had not achieved in a decade, discounted at 12%, and counted all cash. We now discount at 6%, but build the cash flow from the record, hold back operating cash, and deduct the March 2026 Series B terms (6% dividend, $100 redemption in June 2029) and the cost of the expensive term loan. The overall effect is a lower base ($1.91), a lower bull ($4.36) and a negative bear; most of that comes from the more careful treatment of cash and the preferred stock, while the operating picture improved modestly. What would make this wrong: if second-half 2026 results repeat the strong first-half gain without a new round of losses, the base is too low; if the gross-margin gain reverses, the bear is closer than the base. The margin-of-safety price sits well below the base because the range of outcomes runs from negative to more than double the base.