For Immediate Release
Chicago, IL – January 2, 2018 – Zacks Equity Research Sony Corporation (SNE - Free Report) as the Bull of the Day, Schlumberger Ltd. (SLB - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Azure Power Global (AZRE - Free Report) , Canadian Solar (CSIQ - Free Report) and Real Goods Solar .
Here is a synopsis of all five stocks:
Bull of the Day:
Sony Corporationis on sale as investors rushed to sell the big technology and gaming companies to end 2018. However, this Zacks Rank #1 (Strong Buy) isn't struggling. It's expected to grow earnings by 38% in fiscal 2019.
Sony is a global technology, entertainment and gaming company headquartered in Japan. It's most famous for its Sony Walkman but more recently, it's the PlayStation that gets the most love.
Big Beat in Fiscal Q2
On Oct 30, Sony reported its fiscal second quarter 2019 results and blew by the Zacks consensus by $0.29. Earnings were $1.20 versus the consensus of $0.91. for a beat of 31%.
Sony has a solid track record of beating. This was the 6th consecutive earnings beat.
Total revenue grew 6% to $19.6 billion.
The Gaming division led the results, with gaming revenue, fueled by Playstation, jumping 27% year-over-year to $5 billion. On those sales it made $803 million in profit.
75.1 million games were purchased. Playstation Plus, its subscription gaming service, also had record subscribers for a second quarter at 34.3 million, up from 33.9 million a year ago.
The Pictures segment has also recovered thanks to Hotel Transylvania 3 and the television licensing rights to Jumanji and Peter Rabbit. Pictures revenue actually fell 1% in the quarter, but at least it wasn't the drag it used to be.
Additionally, third quarter will see the results of the surprise global hit "Venom."
Music revenue also declined 1% year-over-year but the company closed on its deal to purchase the rest of EMI Publishing on Nov 15, which was in the third quarter.
The $2.4 billion purchase will make it among the 3 largest music publishers in the world.
In an increasingly content-dependent global economy, this should position Sony well for the coming years.
Surprising areas of growth included its smaller Semiconductor segment, which saw revenue jump 11%, and the Financial Services segment which saw revenue jump 27% thanks to gains in Sony Life Insurance.
It's mobile division, which is the smartphone, was a disaster however. It continues to take losses against competitors like Apple as sales fell 32%. How much longer will it stay in this business?
Full Year Guidance Raised
Sony is usually conservative with guidance so it's not a surprise that the company raised full year operating income guidance to 870b yen from 670b yen.
Zacks only has 2 full year estimates as not many analysts cover Sony, despite its size and reputation, because coverage of foreign companies is sparse.
The Zacks Consensus Estimate for fiscal 2019 is now $4.54 up from $4.17 just 3 months ago. That's earnings growth of 38% as the company earned $3.29 in fiscal 2018.
Analysts expect earnings to grow just 2.1% in fiscal 2020, however.
The Zacks Consensus of $4.63 has been stuck at that number for the last 60 days. However, Sony hasn't yet provided any guidance on fiscal 2020 so the 2 covering analysts appear to be on the sidelines, for now.
Shares are on Sale
Sony shares were having a nice 2018 until the November and December stock market sell-off.
Shares fell 20% in the last 3 months of the year, including an 11% plunge in December.
They're cheaper than ever with a forward P/E of just 10.6.
They also have other classic value fundamentals including a P/B ratio of just 1.7 and a P/S ratio of only 0.8.
Shareholders get a dividend, but it's just yielding 0.4%.
For investors looking for a blue chip technology and media company that is a hidden gem, Sony is one to keep on the short list.
Shares jumped on the earnings report and are still up 21.5% year-to-date.
However, they're still cheap, with a forward P/E of just 12.9.
Shareholders also get a small dividend, currently yielding 0.5%.
But for investors looking for a bargain amongst the big entertainment and gaming companies, Sony is one to keep on your short list.
Bear of the Day:
Schlumberger Ltd. shares hit a new 5-year low in 2018 as plunging oil prices spooked investors. This Zacks Rank #5 (Strong Sell) is expected to see flat earnings year-over-year in 2019.
Schlumberger is the world's leading provider of technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. It has a market cap of $50 billion.
Schlumberger to Report Fourth Quarter Results in Mid-January
On Jan 18, before the bell, Schlumberger will report its fourth quarter results.
It has an excellent track record of beating the estimate with just 1 miss in 5 years.
This will be heavily anticipated as the third quarter report was before the recent oil price plunge and subsequent production cuts by some countries.
Canada, for instance, has already cut its rig count in half in a matter of weeks.
Some of that is to prepare for the winter as the Canadians apparently routinely shut down rigs at the end of the year, but this year's cuts have been far more dramatic.
On Oct 19, Schlumberger reported its third quarter results. It saw free cash flow of a $1 billion in the quarter.
It's been rewarding shareholders. During the third quarter, it repurchased 1.5 million shares for a total of $100 million.
The company also continues to pay a dividend, now yielding a juicy 5.5%.
Shares at Multi-Year Lows
Investors fled the energy stocks at the end of 2018. Schlumberger shares fell 48% in 2018 and are now at multi-year lows.
That's hard to believe because the energy stocks got pretty grim during the 2015-2016 downturn too.
Are they a deal?
They're not cheap. They still trade with a forward P/E of 22.2 because 11 estimates for 2019 have been cut in the last 90 days lowering the Zacks Consensus Estimate to $1.65 from $1.78.
3 Solar Stocks to Shine Your Portfolio in 2019
U.S. Solar stocks have been out of the spotlight in 2018, courtesy of President Trump’s policies to revive the coal industry. For instance, at the onset of 2018, Trump imposed a 30% tariff on the import of solar panels that dealt a major blow to solar stocks.
However, not all is lost for the U.S. solar space. Per the latest Solar Market Insight Report by Solar Energy Industries Association (SEIA), since fourth-quarter 2017, residential solar installations have not deviated more than 1% on a quarter-over-quarter basis, demonstrating the steadiness of the sector.
Moreover, despite witnessing the lowest quarterly installation volume since 2015, utility solar photovoltaic (PV) accounted for the largest share of U.S. solar capacity installed in the third quarter of 2018. Further, procurement of U.S. utility solar exploded in 2018, with a total of 11.2 GWdc of projects announced over that time frame. In particular, declining costs of solar panels and modules along with grid developments have made the U.S. solar industry an attractive investment space for big corporate houses, apart from utility providers.
What’s Does 2019 Hold for the Solar Market?
The solar market is expected to witness accelerated deployment in 2019 driven by utility-scale projects. Wood Mackenzie has lifted the utility solar forecast for 2019 to 7.2 GWdc from 6.9 GWdc. For the residential PV space, a stellar comeback is expected next year.
Factors like the declining costs of solar installations as well as increased adopted of solar power by nations like India and Japan are enhancing opportunities for U.S. solar stocks. Although the import tariff may impede the initial rally of U.S. solar stocks, there’s no denying that renewables are the ultimate future and with America being one of the top five solar installers worldwide, prospects remain bright for its solar players.
In view of this, we have picked three players from the Zacks Solar Industry with a Zacks Rank of #1 (Strong Buy) or 2 (Buy) for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Azure Power Global is an independent power producer and operator of utility and commercial scale solar PV power plants. The company, sporting a Zacks Rank #1, has an expected earnings growth rate of 83.08% for fiscal 2020.
Canadian Solaris a manufacturer of solar PV modules and provides turn-key solar energy solutions. The company, with a Zacks Rank #1, has an expected earnings growth rate of 10.62% for the next year.
Real Goods Solaris a provider of solar power systems and residential solar power. The company, with a Zacks Rank #2, has an expected earnings growth rate of 369.81% for the next year.
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year. Be among the first to see the new Zacks Top 10 Stocks >>
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