Sony Corporation (SNE) Is Today's Water-Logged And Getting Wetter Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Sony Corporation ( SNE) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sony Corporation as such a stock due to the following factors:

  • SNE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.7 million.
  • SNE has traded 2.6 million shares today.
  • SNE traded in a range 315.7% of the normal price range with a price range of $1.02.
  • SNE traded below its daily resistance level (quality: 180 days, meaning that the stock is crossing a resistance level set by the last 180 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on SNE:

Sony Corporation designs, develops, manufactures, and sells electronic equipment, instruments, and devices for consumer, professional, and industrial markets worldwide. The stock currently has a dividend yield of 1.2%. SNE has a PE ratio of 6.1. Currently there are 3 analysts that rate Sony Corporation a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Sony Corporation has been 2.3 million shares per day over the past 30 days. Sony has a market cap of $21.6 billion and is part of the consumer goods sector and consumer durables industry. Shares are up 90.8% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sony Corporation as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • SONY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SONY CORP turned its bottom line around by earning $0.30 versus -$5.52 in the prior year. This year, the market expects an improvement in earnings ($0.41 versus $0.30).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Household Durables industry average. The net income increased by 111.4% when compared to the same quarter one year prior, rising from -$308.75 million to $35.08 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that SNE's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
  • The gross profit margin for SONY CORP is currently extremely low, coming in at 4.23%. 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 0.20% trails the industry average.
  • Net operating cash flow has significantly decreased to -$1,327.18 million or 314.38% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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