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Sony (SNE) to Report FY19 Q4 Earnings: What Lies in Store?

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Sony Corporation (SNE - Free Report) is scheduled to report fourth-quarter fiscal 2019 results after the closing bell on May 13. The company is likely to have generated lower consolidated revenues on a year-over-year basis in the fourth quarter due to volatility in demand resulting from the coronavirus pandemic. 

Factors at Play

Sony is likely to have generated lower revenues from the Game & Network Services segment due to lower-than-expected third-party software sales and deferral of sales in the next fiscal year. The company is likely to have recorded lower sales from PS4 as it marked the transition to the PS5's new-generation console. In addition, Sony is anticipated to have faced higher manufacturing costs for PS5, with scarce components and erratic supply of raw materials compounding its problems to set a balanced retail price.

During the quarter, Sony launched a low-cost, silicon-based vision sensor for autonomous vehicles in order to gain a foothold in the electronics market. Leveraging the LiDAR (Light Detection and Ranging) vision-sensing technology, which is a vital part of safety and functionality in self-driving vehicles, the product is likely to be more affordable and resistant to vibrations.

In the fiscal fourth quarter, the company also expanded its long-standing partnership with Carl Zeiss AG (branded as ZEISS), from digital imaging to Xperia smartphones. The latest flagship smartphone — the Xperia 1 II (Xperia One, Mark Two) — which is the first 5G smartphone from Sony, will feature ZEISS optics with T-Star anti-reflective coating to enhance the quality of images and deliver the best images to consumers for a creative entertainment experience with 5G connectivity.

Despite pro-active steps to expand the adoption of its imaging and sensing technology in the mobility space and the diverse industrial and factory automation space, Sony is likely to have witnessed lower demand trends owing to challenging macroeconomic conditions triggered by the virus outbreak. The broadcast and professional use products business has also seen a significant slowdown in China, which is considered to be an important market for the business, due to latent U.S.-China trade friction.

For the March quarter, the Zacks Consensus Estimate for total revenues stands at $17,002 million, implying a decline of 12% from the year-ago quarter’s reported figure. Adjusted earnings per share are pegged at 31 cents, indicating a 50% decline from the prior-year quarter’s reported figure, led by tough year-over-year comparison induced by the coronavirus pandemic despite operational efficiencies and cost-cutting initiatives.

Earnings Whispers

Our proven model does not 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. This is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 31 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Sony Corporation Price and EPS Surprise


Sony Corporation Price and EPS Surprise


Sony Corporation price-eps-surprise | Sony Corporation Quote

Zacks Rank: Sony currently has a Zacks Rank #4 (Sell).

Stocks to Consider

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

Ciena Corporation (CIEN - Free Report) has an Earnings ESP of +2.37% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Baidu Inc (BIDU - Free Report) is +4.45% and it carries a Zacks Rank of 3.

The Earnings ESP for Cisco Systems, Inc. (CSCO - Free Report) is +6.29% and it carries a Zacks Rank of 3.

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