It's been a great afternoon session for Sony investors, who saw their shares rise 2.9% to a price of $20.45 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
The Market May Be Undervaluing Sony's Assets and Equity:
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. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 23.09 and an average price to book (P/B) ratio of 3.3. In contrast, Sony has a trailing 12 month P/E ratio of 17.6 and a P/B ratio of 0.02.
Sony has moved 2.0% over the last year compared to 23.3% for the S&P 500 — a difference of -21.2%. Sony has a 52 week high of $22.71 and a 52 week low of $15.02.
Generally Positive Cash Flows but Not Enough Current Assets to Cover Current Liabilities:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $8,665,687 | $8,259,885 | $8,999,360 | $9,921,513 | $10,974,373 | $13,020,768 |
| Operating Margins | 10% | 10% | 11% | 12% | 12% | 9% |
| Net Margins | 11% | 7% | 13% | 9% | 9% | 8% |
| Net Income (M) | $916,271 | $582,191 | $1,171,776 | $888,406 | $1,011,773 | $980,494 |
| Diluted Shares (M) | 1,295 | 1,262 | 1,251 | 1,357 | 1,352 | 1,330 |
| Earnings Per Share | $707.74 | $461.23 | $936.9 | $705.16 | $809.85 | $785.68 |
| EPS Growth | n/a | -34.83% | 103.13% | -24.73% | 14.85% | -2.98% |
| Free Cash Flow (M) | $946,094 | $909,984 | $837,911 | $1,233,643 | $314,691 | $1,373,213 |
| Total Debt (M) | $568,372 | $634,966 | $773,294 | $1,203,646 | $1,767,696 | $2,058,117 |
| Net Debt / EBITDA | -0.71 | -0.7 | -0.74 | -0.4 | 0.12 | 0.06 |
| Current Ratio | 0.86 | 0.91 | 0.92 | 0.63 | 0.61 | 0.66 |
Sony has generally positive cash flows, positive EPS growth, and healthy leverage levels. However, the firm has not enough current assets to cover current liabilities because its current ratio is 0.66. Finally, we note that Sony has decent operating margins with a stable trend.
