Rating Change #7

Sony Corporation ( SNE) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SONY CORP reported poor results of -$3.14 versus -$0.43 in the prior year. For the next year, the market is expecting a contraction of 107.3% in earnings (-$6.51 versus -$3.14).
  • 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.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Household Durables industry and the overall market, SONY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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.
  • Net operating cash flow has significantly decreased to $1,748.45 million or 51.36% when compared to the same quarter last year. Despite a decrease in cash flow SONY CORP is still fairing well by exceeding its industry average cash flow growth rate of -71.16%.

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 3.9, below the S&P 500 P/E ratio of 17.7. Sony has a market cap of $13.82 billion and is part of the consumer goods sector and consumer durables industry. Shares are down 21.7% year to date as of the close of trading on Tuesday.

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

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