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Sony (SNE) to Report Q2 Earnings: What's in the Offing?

Zacks Equity Research

Sony Corporation SNE is scheduled to report second-quarter fiscal 2019 financial results on Oct 30, before the opening bell. In the last reported quarter, the company delivered positive earnings surprise of 38.5%. Markedly, Sony topped the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 87.7%.

The electronics and media company is likely to report higher total revenues on a year-over-year basis in the quarter under review on the back of its portfolio strategy. Execution of measures to realign its business portfolio, like withdrawing from the PC business and selling the battery business, is aiding the company.

In recent years, the Japanese firm has achieved sales and profitability growth in the Game & Network Services, Imaging & Sensing Solutions (formerly Semiconductors) and Music segments. It enhanced profitability in the Pictures and Electronics Products & Solutions segments and secured stable profit contribution from the Financial Services segment. The momentum is likely to have continued in the to-be-reported quarter as well.

Let’s see what’s in store for the company this time around.

Factors at Play

During the fiscal second quarter, Sony Imaging Products & Solutions established a strategic partnership with Nevion AS — a leading provider of virtualized media production solutions — in the area of IP-based solutions for broadcasters and other industries. In order to strengthen this relationship, Sony became an investor in Nevion by acquiring a minority stake in the company through a share purchase agreement.

The company, together with Yamaha Motor, developed the SC-1 Sociable Cart — a vehicle that delivers a new mobility experience. Further, Sony released two new models of CMOS image sensors — the IMX415 type 1/2.8 4K-resolution stacked CMOS image sensor, which is the smallest of its kind in the world; and the IMX485 type 1/1.2 4K-resolution back-illuminated CMOS image sensor, which delivers outstanding low-light performance nearly 3.3 times that of conventional.

Sony also introduced its ID7000 flagship spectral cell analyzer, a new flow cytometer that achieves streamlined multicolor cell analysis for more than 44 colors. Such collaborations and state-of-the-art product launches are likely to have benefited the top line in the to-be-reported quarter, amid a challenging business environment and rapidly evolving technology cycles.

For the fiscal second quarter, the Zacks Consensus Estimate for total revenues stands at $20,565 million. The company reported $19,582 million in the prior-year quarter. Consequently, adjusted earnings per share are pegged at $1.08. The same was $1.20 posted a year ago.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Sony this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Sony’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -6.05% as the former is pegged at $1.01 and the latter at $1.08.

Zacks Rank: Sony currently sports a Zacks Rank #1.

Sony Corporation Price and EPS Surprise


Sony Corporation Price and EPS Surprise

Sony Corporation price-eps-surprise | Sony Corporation Quote


Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Portola Pharmaceuticals, Inc. PTLA is slated to release quarterly results on Nov 5. It has an Earnings ESP of +6.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

WW International, Inc. WW is scheduled to release results on Nov 5. The company has an Earnings ESP of +0.64% and sports a Zacks Rank #1.

iRhythm Technologies, Inc. IRTC has an Earnings ESP of +2.85% and carries a Zacks Rank of 2. The company is set to report results on Nov 5.

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