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Bull of the Day: Sony (SNE)

·2 min read

Headquartered in Tokyo, Sony Corporation (SNE) designs and manufactures consumer and industrial electronic equipment. Its product roster comprises of audio and video equipment, televisions, displays, semiconductors, electronic components, gaming consoles, computers, and computer peripherals and telecommunication equipment. Additionally, Sony is active in the production, acquisition and distribution of movies and television, as well as in the music industry.

Q3 Earnings Recap

Last month, shares of Sony soared as much as 10% after reporting better-than-expected third quarter results.

Revenue grew 9% year-over-year to about $26.5 billion, while net income soared 62% to $3.5 billion.

The two big factors driving revenue growth were the company’s music and gaming segments. Music sales rose 22% and gaming and network services sales grew 40% compared to the prior year period.

As a result of these impressive results, Sony raised its outlook for fiscal 2021, and upped its revenue guidance for all segments except pictures.

Sony also anticipated that its gaming segment will be its largest this fiscal year, mostly thanks to the PlayStation 5.

Demand for the new console has been very strong, but recent key chip shortages—driven by pandemic-related volatility—has led to some hiccups in actually making the PS5.

Despite this, Sony still expects to be able meet demand, and in the meantime, the company can lean on high profit margins from the PS4 hardware (which offset any initial losses from the PS5).

SNE Breaks Out

Sony Corporation Price and Consensus
Sony Corporation Price and Consensus

In the past six months, shares of SNE have jumped over 33% compared to the S&P 500’s almost 11% increase. Earnings estimates have been rising too, and SNE is a Zacks Rank #1 (Strong Buy) right now.

For fiscal 2021, four analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up $1.81 to $8.16 per share. Earnings are expected to grow 92.5% compared to the prior year period. Fiscal 2022 looks strong too, despite tough year-over-year comparisons, and analysts remain bullish.

Sony pulled off an impressive turnaround over the past few years thanks to the popularity of its gaming consoles. If you’re an investor searching for a tech stock to add to your portfolio, make sure to keep SNE on your shortlist.

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