Briefing From The Editor -- SONY Stock

Now trading at a price of $99.75, Sony has moved 2.5% so far today.

Sony returned gains of 15.0% last year, with its stock price reaching a high of $100.94 and a low of $79.62. Over the same period, the stock underperformed the S&P 500 index by -4.9%. As of April 2023, the company's 50-day average price was $89.52. Sony Group Corporation designs, develops, produces, and sells electronic equipment, instruments, and devices for the consumer, professional, and industrial markets in Japan, the United States, Europe, China, the Asia-Pacific, and internationally. Based in Tokyo, Japan, the large-cap Consumer Staples company has 113,000 full time employees. Sony has offered a 82.2% dividend yield over the last 12 months.

Exceptional EPS Growth Obtained Primarily Through Share Buybacks:

2018 2019 2020 2021 2022 2023
Revenue (MM) $8,543,980 $8,665,690 $8,259,890 $8,999,360 $9,921,510 $11,539,800
Revenue Growth n/a 1.42% -4.68% 8.95% 10.25% 16.31%
Operating Margins 9% 10% 10% 11% 12% 10%
Net Margins 6% 11% 7% 13% 9% 8%
Net Income (MM) $490,794 $916,271 $582,191 $1,171,780 $888,406 $943,622
Earnings Per Share $379.75 $707.74 $4612.31 $9369.02 $7414.96 $8005.49
EPS Growth n/a 86.37% 551.7% 103.13% -20.86% 7.96%
Diluted Shares (MM) 1,292 1,295 126 125 120 118
Free Cash Flow (MM) $991,981 $946,096 $909,989 $837,911 $1,233,640 $314,691
Current Ratio 0.92 0.86 0.91 0.92 0.63 0.62
Total Debt (MM) $623,451 $568,372 $634,966 $773,294 $1,203,650 $1,767,700
Net Debt / EBITDA -0.88 -0.71 -0.7 -0.74 -0.4 0.12

Sony has growing revenues and no capital expenditures, decent operating margins with a stable trend, and healthy leverage. However, Sony has exceptional EPS growth obtained primarily through share buybacks, positive cash flows, and not enough current assets to cover current liabilities.

Sony Is Fairly Priced at Current Levels:

Sony has a trailing twelve month P/E ratio of 19.8, compared to an average of 21.21 for the Consumer Staples sector. Based on its EPS guidance of $5.58, the company has a forward P/E ratio of 16.0. The -45.3% compound average growth rate of Sony's historical and projected earnings per share yields a PEG ratio of -0.44. This indicates that its shares are overvalued.In contrast, the market is likely undervaluing Sony in terms of its equity because its P/B ratio is 0.02 while the sector average is 4.12.

Analysts Give Sony an Average Rating of Buy:

The 4 analysts following Sony have set target prices ranging from $104.0 to $142.26 per share, for an average of $118.03 with a buy rating. As of April 2023, the company is trading -24.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.

The largest shareholder is Primecap Management Company, whose 2% stake in the company is worth $2,261,742,771.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.