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Sony (SNE) Reports Q3 Results, Earnings & Revenues Up Y/Y
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Sony Corporation reported third-quarter fiscal 2017 earnings per share of ¥228.91 ($2.03), which grew a colossal 1402% from the year-ago quarter figure of ¥15.24, on the back of robust revenue growth.
Inside the Headlines
Sony’s sales and operating revenues were up an impressive 11.5% year over year to ¥2,672.3 billion ($23.6 billion). Solid growth in the Game and Network Services (G&NS) and Home Entertainment & Sound (HE&S) segments as well as positive effect of foreign currency translation spurred top-line growth. The company witnessed impressive performance across its segments.
Additionally, operating income came in at ¥350.8 million ($3,105 million), up a whopping 346.4% from the year-ago quarter. Robust improvement in the operating results of the G&NS, Semiconductors, Financial Services and HE&S segments proved conducive to operating income. Further, the results of the year-ago quarter were adversely affected by impairment charge of goodwill related to the Pictures segment which contributed to the favorable year-over-year comparison.
Semiconductor sales and operating revenues jumped 7.3% year over year to ¥250.9 billion ($2.2 billion). Strong sales of image sensors for mobile products and positive effect of foreign currency translation bolstered sales of this segment.
Financial Services revenues advanced 16.9%, year over year, to ¥373.3 billion ($3.3 billion). Increase in revenue at Sony Life and improvement in investment performance in the general account proved conducive to sales growth of this segment. Higher insurance premiums revenue also drove this segment’s top-line.
Moreover, sales and operating revenues of the Imaging Products & Solutions (IP&S) segment climbed 8.4% year over year to ¥181.1 billion ($1.6 billion). Improvement in product mix reflecting a shift to high value-added models and favorable foreign currency movements acted as a catalyst for the IP&S segment.
The Music segment experienced a 22.4% increase in sales to ¥218.4 billion ($1.9 billion) on a year-over-year basis. It benefited from elevated Visual Media and Platform sales, driven by “Fate/Grand Order” application. In addition, Recorded Music sales grew supported by a steady rise in digital streaming revenues.
The Home Entertainment & Sound (HE&S) segment sales and operating revenues came in at ¥429.8 billion ($3.8 billion), up an impressive 21.6% on a year-over-year basis. The top-line rise came on the back of improvement in product mix of televisions reflecting a shift to high value-added models, as well as favorable foreign currency movements.
Sales and operating revenues from the Pictures segment were up 15.6% year over year to ¥260.3 billion ($2.3 billion). Higher sales in Motion Pictures and Media Networks drove the overall growth. While strong worldwide theatrical performance of “Jumanji: Welcome to the Jungle” drove Motion Pictures sales, robust advertising and subscription revenues in India due to the buyout of TEN Sports Network bolstered Media Networks sales.
Sales and operating revenues at the Game & Network Services (“GN&S”) segment climbed an impressive 16.2% year over year to ¥718 billion ($6.4 billion). Increase in the PS4 software sales (including sales through the network) and favorable foreign currency movements proved conducive to increase in sales.
Mobile Communications (“MC”) sales decreased 12.5% year on year to ¥217.5 billion ($1.9 billion) due to fall in unit sales of smartphones, which was partially offset by favorable foreign currency movements.
Liquidity & Cash Flow
As of Dec 31, 2017, Sony’s cash and cash equivalents were ¥1328.9 million ($11.8 million) compared with ¥960.1 billion recorded on Mar 31, 2017.
Long-term debt totaled ¥594.2 million ($5.3 million) compared with ¥681.5 million as of Mar 31, 2017.
Guidance
Concurrent with the fiscal third-quarter results, Sony provided revenue guidance for fiscal 2017. Currently, the company expects total sales to be around ¥8,500, same compared with the projections of the previous quarter.
Per segments, sales forecast for the fiscal year 2017 remained same compared with the October forecast. This was due to anticipated increases in sales in the Financial Services and Music segments, offset by anticipated fall in sales in the GN&S, MC and Semiconductors segments.
The company raised operating income guidance and now expects it to be around ¥720 billion (earlier projection: ¥630 billion). Improvements in operating income are anticipated to be driven by growth in Music, Semiconductors, Financial Services, and HE&S segments.
The sales forecasts for the fiscal year 2017 for the HE&S, IP&S and Pictures segments remain unchanged from the October forecast. Financial Services sales are forecast to be higher than earlier anticipated. Meanwhile, MC sales are forecast to be lower than expected due to a projected decrease in smartphone unit sales.
Our Take
Over the past few quarters, robust sales of Sony’s flagship gaming product, PlayStation, have boosted the top line. Moreover, the spectacular performance of the company’s Semiconductor business is proving to be a solid profit churner. Further, the company’s diligent restructuring efforts to streamline business structure are proving conducive to operating performance.
Moreover, a number of measures taken by the company including cost-reduction initiatives, lower exposure in low-profit geographic regions and reduction in advertising & promotion expenses, are expected to benefit this business in the long run. This apart, we believe the company’s bolt-on acquisitions and strategic investments will help it expand addressable markets.
Sony currently sports a Zacks Rank #1 (Strong Buy).
Churchill Downs has a decent earnings surprise history, surpassing estimates thrice in the trailing four quarters with an average beat of 9.5%.
Boyd Gaming has a modest earnings surprise history, exceeding estimates twice in the trailing four quarters with an average beat of 13.6%.
Penn National Gaming has posted earning beats thrice in the trailing four quarters. It boasts an average beat of 79.9%.
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Sony (SNE) Reports Q3 Results, Earnings & Revenues Up Y/Y
Sony Corporation reported third-quarter fiscal 2017 earnings per share of ¥228.91 ($2.03), which grew a colossal 1402% from the year-ago quarter figure of ¥15.24, on the back of robust revenue growth.
Inside the Headlines
Sony’s sales and operating revenues were up an impressive 11.5% year over year to ¥2,672.3 billion ($23.6 billion). Solid growth in the Game and Network Services (G&NS) and Home Entertainment & Sound (HE&S) segments as well as positive effect of foreign currency translation spurred top-line growth. The company witnessed impressive performance across its segments.
Additionally, operating income came in at ¥350.8 million ($3,105 million), up a whopping 346.4% from the year-ago quarter. Robust improvement in the operating results of the G&NS, Semiconductors, Financial Services and HE&S segments proved conducive to operating income. Further, the results of the year-ago quarter were adversely affected by impairment charge of goodwill related to the Pictures segment which contributed to the favorable year-over-year comparison.
Sony Corp Ord Price, Consensus and EPS Surprise
Sony Corp Ord Price, Consensus and EPS Surprise | Sony Corp Ord Quote
Semiconductor sales and operating revenues jumped 7.3% year over year to ¥250.9 billion ($2.2 billion). Strong sales of image sensors for mobile products and positive effect of foreign currency translation bolstered sales of this segment.
Financial Services revenues advanced 16.9%, year over year, to ¥373.3 billion ($3.3 billion). Increase in revenue at Sony Life and improvement in investment performance in the general account proved conducive to sales growth of this segment. Higher insurance premiums revenue also drove this segment’s top-line.
Moreover, sales and operating revenues of the Imaging Products & Solutions (IP&S) segment climbed 8.4% year over year to ¥181.1 billion ($1.6 billion). Improvement in product mix reflecting a shift to high value-added models and favorable foreign currency movements acted as a catalyst for the IP&S segment.
The Music segment experienced a 22.4% increase in sales to ¥218.4 billion ($1.9 billion) on a year-over-year basis. It benefited from elevated Visual Media and Platform sales, driven by “Fate/Grand Order” application. In addition, Recorded Music sales grew supported by a steady rise in digital streaming revenues.
The Home Entertainment & Sound (HE&S) segment sales and operating revenues came in at ¥429.8 billion ($3.8 billion), up an impressive 21.6% on a year-over-year basis. The top-line rise came on the back of improvement in product mix of televisions reflecting a shift to high value-added models, as well as favorable foreign currency movements.
Sales and operating revenues from the Pictures segment were up 15.6% year over year to ¥260.3 billion ($2.3 billion). Higher sales in Motion Pictures and Media Networks drove the overall growth. While strong worldwide theatrical performance of “Jumanji: Welcome to the Jungle” drove Motion Pictures sales, robust advertising and subscription revenues in India due to the buyout of TEN Sports Network bolstered Media Networks sales.
Sales and operating revenues at the Game & Network Services (“GN&S”) segment climbed an impressive 16.2% year over year to ¥718 billion ($6.4 billion). Increase in the PS4 software sales (including sales through the network) and favorable foreign currency movements proved conducive to increase in sales.
Mobile Communications (“MC”) sales decreased 12.5% year on year to ¥217.5 billion ($1.9 billion) due to fall in unit sales of smartphones, which was partially offset by favorable foreign currency movements.
Liquidity & Cash Flow
As of Dec 31, 2017, Sony’s cash and cash equivalents were ¥1328.9 million ($11.8 million) compared with ¥960.1 billion recorded on Mar 31, 2017.
Long-term debt totaled ¥594.2 million ($5.3 million) compared with ¥681.5 million as of Mar 31, 2017.
Guidance
Concurrent with the fiscal third-quarter results, Sony provided revenue guidance for fiscal 2017. Currently, the company expects total sales to be around ¥8,500, same compared with the projections of the previous quarter.
Per segments, sales forecast for the fiscal year 2017 remained same compared with the October forecast. This was due to anticipated increases in sales in the Financial Services and Music segments, offset by anticipated fall in sales in the GN&S, MC and Semiconductors segments.
The company raised operating income guidance and now expects it to be around ¥720 billion (earlier projection: ¥630 billion). Improvements in operating income are anticipated to be driven by growth in Music, Semiconductors, Financial Services, and HE&S segments.
The sales forecasts for the fiscal year 2017 for the HE&S, IP&S and Pictures segments remain unchanged from the October forecast. Financial Services sales are forecast to be higher than earlier anticipated. Meanwhile, MC sales are forecast to be lower than expected due to a projected decrease in smartphone unit sales.
Our Take
Over the past few quarters, robust sales of Sony’s flagship gaming product, PlayStation, have boosted the top line. Moreover, the spectacular performance of the company’s Semiconductor business is proving to be a solid profit churner. Further, the company’s diligent restructuring efforts to streamline business structure are proving conducive to operating performance.
Moreover, a number of measures taken by the company including cost-reduction initiatives, lower exposure in low-profit geographic regions and reduction in advertising & promotion expenses, are expected to benefit this business in the long run. This apart, we believe the company’s bolt-on acquisitions and strategic investments will help it expand addressable markets.
Sony currently sports a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Some other top-ranked stocks worth considering in the same space include Churchill Downs, Inc. (CHDN - Free Report) , Boyd Gaming Corp. (BYD - Free Report) and Penn National Gaming, Inc. (PENN - Free Report) . While Churchill Downs sports a Zacks Rank #1, Boyd Gaming and Penn National Gaming carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Churchill Downs has a decent earnings surprise history, surpassing estimates thrice in the trailing four quarters with an average beat of 9.5%.
Boyd Gaming has a modest earnings surprise history, exceeding estimates twice in the trailing four quarters with an average beat of 13.6%.
Penn National Gaming has posted earning beats thrice in the trailing four quarters. It boasts an average beat of 79.9%.
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
Click here to access these stocks >>