Yahoo Finance Reasons Why Investors Should Invest in SONY Stock Right Now
Sony Group Corporation SONY appears to be a promising stock to add to the portfolio to tackle the current macroeconomic and geopolitical uncertainties and benefit from its healthy fundamentals and growth prospects.
Let’s look at the factors that make the stock an attractive pick:
Attractive Pricing: Wall Street is facing extreme volatility due to macroeconomic factors, such as rising inflation and interest rate hikes by the Federal Reserve, increased crude oil prices and lingering supply-chain woes.
The above-mentioned factors are taking a toll on major U.S. indices. In the past year, the S&P 500 has fallen 10.9%.
The stock is down 20.4% from its 52-week high level of $107.52 on Mar 24, 2022, making it relatively affordable for investors.
Solid Rank: SONY currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Positive Earnings Surprise History: SONY has an impressive surprise record. Earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average being 22.2%.
The company reported third-quarter fiscal 2022 net income per share (on a GAAP basis) of ¥263.89 per share ($1.87 per share), decreasing from ¥276.65 reported in the year-ago quarter.
However, quarterly total revenues increased 13% year over year to ¥3,412.9 billion ($24,197.6 million).
Factors That Augur Well
Sony is a well-known player in the video game space, with its PlayStation being one of the most sought-after gaming consoles in the world. The company’s Games & Network Services (G&NS) segment is one of the largest contributors to the top line. In the third quarter, the company sold 7.1 million units of Play Station 5 (PS5).
In the third quarter, G&NS sales were up 53% year over year to ¥1246.5 billion. Sales in the segment increased owing to the positive impact of the forex movement, first-party titles and improving hardware sales.
The company’s latest PS VR2 is expected to increase the performance of PS5 and provide an immersive virtual reality experience. The company expects to sell more than 19-million-unit sales for its PS5 for fiscal 2022.
The Music segment is likely to have benefited from higher recorded music and music publishing sales from paid subscription streaming services. Also, the company’s Entertainment, Technology & Services (ET&S) continues to benefit from an increase in sales of digital cameras and favorable foreign exchange rates.
For fiscal 2022, the company now expects sales of ¥11,500 billion, up 15.9% year over year. The top-line performance is likely to be driven by improvement in GN&S, Music, Pictures and ET&S segment sales.
Recent Developments
In February, the company launched the next generation of its Creators' Cloud platform specifically for individual content creators and small content teams. Following the launch of Creators’ App, the next version of Creators' Cloud platform will include features like transferability of content from a select Sony camera to a smartphone and upload content from the smartphone to the Creators' Cloud.
Prior to that, the company unveiled two new wireless headphones, the WH-CH720N and the WH-CH520, powered by Sony’s powerful in-house audio technology. The WH-CH720N has a suggested retail price of $149.99, while the WH-CH520 has a suggested retail price of $59.99.
Both models will be available for purchase in spring 2023 at Sony Electronics, Amazon, Best Buy and other Sony-authorized retailers in three color options, namely, black, blue and white.
Few Headwinds
Despite its solid fundamentals, the company is prone to several risks. The company operates in a highly competitive and capital-intensive gaming and entertainment market. This is likely to negatively impact the company’s performance.
The company’s Pictures business segment is affected by lower sales for theatrical films and television licensing. In 2022, box office revenues in the United States were 60% compared with 2019, owing to fewer films being released due to pandemic-induced production delays.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Arista Networks ANET, Perion Network PERI and Pegasystems PEGA, each presently sporting a Zacks Rank #1.
The Zacks Consensus Estimate for Arista Networks 2023 earnings is pegged at $5.79 per share, rising 11.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 23.1% in the past year.
The Zacks Consensus Estimate for Perion’s 2023 earnings is pegged at $2.69 per share, rising 16% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
Perion’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 31.7%. Shares of PERI have increased 66% in the past year.
The Zacks Consensus Estimate for Pegasystems 2023 earnings is pegged at $1.31 per share, rising 111.3% in the past 60 days.
Pegasystems earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of the company have declined 40.8% in the past year.
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Perion Network Ltd (PERI) : Free Stock Analysis Report
Pegasystems Inc. (PEGA) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
Sony Corporation (SONY) : Free Stock Analysis Report
