Rating Change #5

Sony Corporation ( SNE) has been upgraded by TheStreet Ratings from sell to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.49, 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 0.57, displays a potential problem in covering short-term cash needs.
  • Despite the weak revenue results, SNE has outperformed against the industry average of 42.9%. Since the same quarter one year prior, revenues fell by 15.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SONY CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SONY CORP reported poor results of -$3.14 versus -$0.43 in the prior year. This year, the market expects an improvement in earnings (-$2.55 versus -$3.14).
  • The gross profit margin for SONY CORP is currently extremely low, coming in at 3.90%. It has decreased from the same quarter the previous year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Household Durables industry. The net income has significantly decreased by 329.2% when compared to the same quarter one year ago, falling from $901.20 million to -$2,065.49 million.
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Sony Corporation designs, develops, manufactures, and sells electronic equipment, instruments, and devices for consumer, professional, and industrial markets worldwide. The company has a P/E ratio of 6.2, below the S&P 500 P/E ratio of 17.7. Sony Corporation ADR has a market cap of $18.01 billion and is part of the consumer goods sector and consumer durables industry. Shares are up 23.4% year to date as of the close of trading on Wednesday.

You can view the full Sony Corporation ADR Ratings Report or get investment ideas from our investment research center.

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