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4 Top Stocks From the Thriving Audio Video Production Industry

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The Zacks Audio Video Production industry is likely to benefit from investments in leading-edge technology solutions that create a better communications experience. The companies are concentrating on the premium segment of the branded products market to maximize growth.

The industry players have a comprehensive product portfolio and direct-to-consumer operating framework. Healthy business momentum, along with controlled costs, is likely to boost their bottom line. Increasing demand for premium audio-visual experiences will fuel growth over the long haul. Corporations like Sony (SNE - Free Report) , Panasonic (PCRFY - Free Report) , Toshiba (TOSYY - Free Report) and Sonos (SONO - Free Report) are well positioned to gain from the evolving market dynamics.

About the Industry

The Zacks Audio Video Production industry comprises manufacturers of televisions, speakers, video players and camcorders. It includes companies that offer gaming consoles, drones and high-end cameras for individuals and industrial markets around the world. These firms provide state-of-the-art audio, imaging and voice technologies that enhance entertainment and communication at theaters, homes, work and mobile devices. Some industry participants also design and develop audio and imaging products, including digital cinema servers as well as products for film production, cinema and entertainment industries.

Apart from providing a host of services for theatrical and television production for cinema exhibition, broadcast and home entertainment, these companies work with film studios, content creators, post-production facilities, cinema operators, broadcasters as well as video game designers. Some prominent players even have a presence in the music and image-based software markets worldwide.

What’s Shaping the Future of Audio Video Production Industry

Technological Advancement to Drive Growth: Over the years, the shift to digital technology has catered to the demand for high-resolution video, reduced the problems of radio frequency and electromagnetic interference, making audio-visual systems more data-network friendly. Wireless transmission has enabled the broadcast of audio and video signals through wireless data networks in a seamless manner while enhancing productivity. The industry has been providing valuable services to a variety of media producers. That said, easy online accessibility of recording equipment and the widespread availability of distribution channels on the Internet is a challenge.

Changing Consumer Preferences: In the United States, smart-connected televisions, microphones and speaker enclosures are the most popular electronic devices among customers. The U.S. manufacturers of audio and video systems face competition from importers of comparatively low-priced devices, particularly from China, Vietnam and Mexico. Nevertheless, the companies are benefiting from investments in advanced technology solutions that create a better communications experience. Furthermore, stability among the producers and various advertisers is likely to enable entertainment industries to take advantage of increasing consumer disposable income levels.

Growing Demand for Premium Entertainment: The industry has performed well despite drastic changes in how media is consumed and distributed. The companies have also rebounded after witnessing sluggish growth due to a slowdown in TV and film production, which resulted from the pandemic. The long-term growth drivers are intact, with the economy getting back on the track followed by an improving macroeconomic climate. The rise in demand for premium entertainment from record labels, TV producers and advertisers is likely to drive revenue growth. Meanwhile, demand for video post-production services will increase in the coming days as the downstream market continues to grow.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Audio Video Production industry is housed within the broader Zacks Consumer Discretionary sector. It currently has a Zacks Industry Rank #33, which places it at the top 13% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the top 50% of the Zacks-ranked industries is an outcome of a positive earnings outlook for the constituent companies. Looking at the aggregate earnings estimate revisions, it appears that analysts have gained confidence in this group’s earnings growth potential. Since September 2020, the industry’s earnings estimates for the current year and the next have increased 10.3% and 21.9%, respectively.

Before we present a few audio-video production stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.

Industry Outperforms Sector, S&P 500

The Zacks Audio Video Production industry has outperformed both the broader Zacks Consumer Discretionary sector and the S&P 500 composite in the past year.

The industry has returned 40% over this period compared with the S&P 500’s rise of 17.4%. The broader sector has gained 13%.

One-Year Price Performance

Industry’s Current Valuation

The Price-to-Sales ratio is commonly used for valuing audio-video production stocks. The industry currently has a forward 12-month P/S of 1.32X compared with the S&P 500’s 4.52X. It is also below the sector’s forward 12-month P/S of 2.91X.

Over the past five years, the industry has traded as high as 1.32X and as low as 0.13X with the median of 0.67X, as the chart below shows.

Price-to-Sales F12M Ratio (Past Five Years)





4 Audio Video Production Stocks to Keep a Close Eye on

Sony: Headquartered in Tokyo, Japan, Sony produces and sells electronic equipment and devices for the consumer and industrial markets worldwide. The Game & Network Services segment is benefiting from an increase in game software sales and PlayStation Plus subscriptions. Sony launched its next-generation gaming console, PlayStation 5. The company has expanded its 360 Reality Audio services and product offerings, including adding new video streaming capabilities and content creation tools. It has also unveiled the Airpeak aircraft as part of its drone project in the field of artificial intelligence (AI) robotics. Sony aims to contribute to the evolution of drones and generate value within this growing market. The company has completed its VISION-S prototype vehicle and has begun public road tests in Europe, with plans to conduct driving tests in other regions. By bringing together its cutting-edge technologies, the company intends to contribute to the evolution of mobility by contributing to safety and in-car entertainment. These developments are likely to aid Sony’s performance, going forward. The Zacks Consensus Estimate for its next-year earnings has been revised 1.7% upward over the past 60 days. The stock has gained 35.3% in the past six months compared with the industry’s 36.1% growth. Sony currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: SNE



Panasonic: Headquartered in Kadoma, Japan, Panasonic is a worldwide leader in the development of diverse electronics technologies and solutions for customers in the consumer electronics, housing, automotive and B2B businesses. It operates 528 subsidiaries and 72 associated companies. Committed to pursuing new value through innovation across divisional lines, the company uses its technologies to create a better world for its customers. The consensus estimate for its next-year earnings has been revised 5.6% upward over the past 60 days. The stock has moved up 33% in the past six months. Panasonic carries a Zacks Rank #2 (Buy) and has a VGM Score of A.

Price and Consensus: PCRFY



Toshiba: Headquartered in Tokyo, Japan, Toshiba leads a global group of companies that combines knowledge and capabilities in a wide range of businesses — from energy and social infrastructure to electronic devices. Strength in information processing, digital and AI technologies supports Toshiba’s evolution toward becoming an infrastructure services company that promotes data utilization and digitization, and one of the world’s leading cyber-physical-systems technology firms. The consensus estimate for its next-year earnings has been revised 2.8% upward over the past 60 days. The stock has lost 8.8% in the past six months. Toshiba carries a Zacks Rank #2.

Sonos: Headquartered in Santa Barbara, CA, Sonos is one of the world’s leading sound experience brands. The company has announced a new line-up of exclusive artist stations and original programming coming to Sonos Radio and Sonos Radio HD. The company is focused on delivering innovative products and services, strengthening its direct-to-consumer efforts. It is well positioned to deliver strong profit margins, cash flow, revenue growth and increased shareholder value over the long term. The consensus estimate for its next-year earnings has been revised 486.7% upward over the past 60 days. The stock has returned 78.6% in the past six months. Sonos carries a Zacks Rank #2.

Price and Consensus: SONO

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