NEW YORK (TheStreet) -- Shares of Sony Corp. (SNE) - Get Report are up 2.42% to $16.50 in pre-market trade as CEO Kazuo Hirai said the company aims to increase sales of its PlayStation 4 game console to drive growth in its network services such as streamed games and video and recapture the momentum its hardware business has lost against rivals such as Apple (AAPL) - Get Report and Samsung Electronics (SSNLF) , Reuters reports
Kazuo Hirai said that while Sony's flagship electronics division would put profit before sales volume as it tries to pull out of the red, games would be an exception as the company expands its reach in networks, Reuters said.
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 attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."
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.
- Despite its growing revenue, the company underperformed as compared with the industry average of 18.8%. 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.
- The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that SNE's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.
- 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.
- SNE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.96%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: SNE Ratings Report