Back to top

Sony (SNE) Hits 52-Week High on Favorable Growth Dynamics

Read MoreHide Full Article

Shares of Sony Corporation (SNE - Free Report) scaled a new 52-week high of $59.51 during Friday’s trading session, before closing a tad lower at $59.44, showing a healthy year-to-date return of 32.2%. Barring minor hiccups, the company’s share price has been steadily trending higher since July. This Zacks Rank #1 (Strong Buy) stock has the potential for further price appreciation with a modest long-term earnings growth expectation of 7.1%.

Growth Drivers

Over the past two years, this electronics goods manufacturer has been taking concerted efforts to attain a leaner organizational structure. The company announced a number of changes in its internal administration and reshuffled its operating segments.

Sony believes that converting its business units into distinct subsidiaries will enhance its organizational independence as each independent unit sets high targets in an effort to accomplish the company’s mid-term targets. These steps have enabled it to generate sustainable profit, accelerate decision-making processes and reinforce business competitiveness, which augurs well for growth.

Sony has also undertaken a number of measures in its Branded Product Business, which includes Mobile Communications, Imaging Product & Solutions, and Home Entertainment & Sound segments, to ensure stronger growth. A number of measures, including cost reduction, lower exposure in low-profit geographic regions and cutting down on advertising & promotion expenses, are expected to benefit this business over the long haul.

The company plans to focus mainly on the premium segment of the branded products market to maximize growth. Within the digital imaging business, the company has launched a full-frame mirrorless interchangeable single-lens camera α9 and expects this to be a key catalyst for the Camera business. Within the HE&S segment, the company is focusing on high value-added models such as 4K TVs and products centered on artificial intelligence to improve product mix.

Increase in media networks and television productions sales as well as insurance premium revenues are expected to stoke growth of the Pictures and Financial Services segments, respectively. This apart, Music sales are expected to rise on higher-than-expected Visual Media and Platform and Recorded Music sales.

The company expects total sales in fiscal 2018 of ¥8,600 billion, up from the previous estimate of ¥8,300 billion. It believes that impressive sales at the Game & Network Services, Semiconductors and the Pictures segments will fuel top-line growth. Estimates for the company’s fiscal 2018 earnings have moved up from $3.86 a share to $4.17 in the past couple of months, portraying bullish sentiments.

The favorable growth dynamics have probably perked up investors, driving the company’s shares to a fresh 52-week high.

Other Stocks to Consider

Other stocks in the industry worth considering include Sky plc (SKYAY - Free Report) , Entravision Communications Corp. (EVC - Free Report) and Townsquare Media, Inc. (TSQ - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sky plc has a long-term earnings growth expectation of 13%.

Entravision has surpassed estimates thrice in the trailing four quarters, the average positive earnings surprise being a stellar 2,108.3%.

Townsquare Media has a long-term earnings growth expectation of 4.5%. It has surpassed estimates twice in the trailing four quarters, the average positive earnings surprise being 4.4%.

Best Electric Car Stock? You'll Never Guess It.

Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think!

Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022.

See Zacks Best EV Stock Free >>



More from Zacks Analyst Blog

You May Like

Published in