Tumbling to a price of $20.83 during today's morning trading session, shares of Sony are now -14.52% below their average target price of $24.37. Does this mean the stock will reverse course? Analysts are giving SONY an average rating of buy and target prices ranging from 23.0 to 27.54 dollars per share.
The market seems to share this rosy outlook, since Sony has a short interest of only 0.1%. This represents the percentage of the share float that is being shorted, and each short position stands for an investor's expectation that the price of the stock will go down in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
One measure of the market sentiment regarding a stock is its rate of institutional ownership, which in the case of Sony stands at 7.9%. This indicates a lower than average rate of institutional ownership -- but what does that have to do with sentiment regarding the stock?
The reason we look at institutional ownership is that institutions such as hedge funds, pension funds, and mutual funds have vast research capabilities. They are often close to management, speaking to them one-on-one and gaining an understanding of the opportunities and challenges they face. Thus, if an institution is willing to place their capital in a company, it's likely that their due diligence has shown it is a safe bet.
Overall, there is mixed market sentiment towards Sony because of an analyst consensus of some upside potential, a buy rating, a very low short interest, and a very small number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about SONY:
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It has trailing 12 month earnings per share (EPS) of $1.17 per share
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Sony has a trailing 12 month Price to Earnings (P/E) ratio of 17.8 while the S&P 500 average is 29.3
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The company has a Price to Book (P/B) ratio of 0.02 in contrast to the S&P 500's average ratio of 4.74
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Sony is a Consumer Staples company, and the sector average P/E and P/B ratios are 23.09 and 3.3 respectively
