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Sony Corporation Message Board

  • lloyd_barclay lloyd_barclay Mar 27, 2008 8:57 PM Flag

    Good Value

    March 27, 2008
    At $41, Sony (SNE) is good value in relation to its competitors in the Audio-and-Video-Equipment Industry. It is also reasonable in relation to its own trading history.

    Sales and Earnings
    Sony's trailing price/earnings ratio is 15.9 and the forward p/e is ratio is estimated to be about 13. These ratios indicate that Sony is reasonably valued. Also, the high sales in relation to the share price leaves a lot of potential to increase profits with reasonable margins. Sony's price/sales ratio is 0.47, compared to the industry average of 2.07. The industry average price/earnings ratio is 24.4.

    Sony's price/book ratio is 1.15, compared to the industry average of 4.78.

    Contrarian Considerations
    Priced in terms of its own trading history (if we assume the average of the highs and lows to be a reasonable valuation of its stock) then we can calculate a reasonable valuation to be:

    ($125 + $25)/2 = $75

    This means that, at $41, Sony is trading at a 45% discount to its "average' price over the last 10 years.

    Whatever valuation you choose, Sony is good value at $41.

    To view a portfolio of thoroughly-researched, value-contrarian stocks, please visit my investment website at:

    http://LloydBarclay.com

    Best regards,

    Lloyd Barclay

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