NEW YORK (TheStreet) -- Sales of new video games fell 11% to $328 million in February 2014 despite new consoles from Microsoft (MSFT - Get Report) and Sony (SNE - Get Report) according to a new report from NPD Group.
Shares of Microsoft were falling 0.1% to $7.85 and shares of Sony were falling 2.1% to $17.26.
An NPD analyst said that games sales for the new consoles aren't enough to offset sales of titles for the last generation of consoles yet. NPD expects sales of games for the Xbox 360 and PlayStation 3 to slow down over time as more gamers switch to the new consoles and more games are released for the consoles.
While game software sales dropped year-over-year, hardware sales increased 42% to $347 million on the backs of the Xbox One and PlayStation 4 which both released in November. The PlayStation 4 edged out the Xbox One in sales in the month, making it the top-selling console in the U.S. again.
Microsoft said that it sold 258,000 Xbox One consoles in the U.S. in February. That would mean Sony sold roughly 287,000 PS4s in the U.S. in the month, as Xbox One unit sales were 90% of PS4 unit sales.
Sony recently announced it sold 6 million PlayStation 4 consoles worldwide following the Japanese launch of the title. At the end of 2013 Microsoft said it sold more than 4.2 million Xbox One consoles.
TheStreet Ratings team rates SONY CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SONY CORP (SNE) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 468.6% when compared to the same quarter one year prior, rising from -$72.42 million to $266.97 million.
- SNE's revenue growth trails the industry average of 28.8%. Since the same quarter one year prior, revenues rose by 11.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Household Durables industry and the overall market, SONY CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for SONY CORP is currently extremely low, coming in at 7.87%. Regardless of SNE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.29% trails the industry average.
- You can view the full analysis from the report here: SNE Ratings Report