Sony: Strong Play for Growth, Value and Income

NEW YORK (TheStreet) -- Kicking off the Consumer Electronics Show in Las Vegas, Kaz Hira, Chief Executive Officer of Sony (SNE), focused on his company's plans for a cloud-based TV service, 4K TVs and other products. It is all part of the "One Sony" vision that Hira has emphasized since taking over in April 2012.

There are three reasons investors should be bullish about the future of Sony.

1. "We all know content is king. We've made advances there as well," stated Sony President Mike Fasulo. I think that can certainly be seen in the tepid stock price performance for Apple ( AAPL) and Samsung reporting a decline in profits, companies seen as royalty in the world of hardware.

Sony has tons of content and it is bringing in more for the consumer. Sony announced two new content products at the CES: PlayStation Now, which is a network for cloud-based games; and a video service for live and on-demand offerings.

2. Financials are compelling for growth, value, and income investors.

The sales growth rate for Sony over the past five years was a negative 5.20%. It is now 10.60% on a quarterly basis. For the past half decade, the earnings-per-share growth rate was off by 35%. This year, the earnings-per-share growth rate is 108.90%. Over the next five years it is projected to be 55.80%. The strong sales of PlayStation 4 add credibility to that bullish outlook. That should please even the most demanding of growth investors.

Those seeking value should be enamored of a price-to-sales ratio of 0.27. That means that every dollar of sales is valued at almost a 75% discount in the stock price of Sony. The price-to-book ratio is 0.86, providing a discount of almost 15% for those buying shares based on the asset value. With both sales and earnings growing, Sony is obviously not a value trap, but a value play.


For income investors, there is a dividend yield of 1.37%. While that is beneath the average for a member of the Standard & Poor's 500 Index, there is plenty of cash to increase the dividend. The payout ratio is only 18.60%, far below what is typical for a Standard & Poor's 500 company.

3. Sony has outside investors pressuring it, just like Apple and Microsoft (MSFT).

Hedge fund manager Daniel Loeb has about 7% of Sony, either directly or indirectly, making him the largest shareholder. In May 2013, he wrote Hira, calling for a break-up of Sony (not exactly a "One Sony" strategy). Steve Ballmer, Microsoft CEO, pushed his "One Microsoft" vision in a July 11, 2013 email. The board of Microsoft is now looking for his replacement. There is likely to be more pressure on Sony in the future to enhance shareholder value.

Over the last year, Sony is up more than 70%.

But it is down for the last quarter and month. The push into content outlined in executive communications at Vegas has the stock rising more than 5.55% for the last week, however. Growth, value, and income investors should be bullish that the share price will continue to increase into the future.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Jonathan Yates has written for numerous publications including Newsweek and The Washington Post. He is a former general counsel for a publicly traded corporation. Much of his career was spent working on Capitol Hill for Members of Congress in both the House and Senate. He has degrees from Harvard University, Georgetown University Law Center and The Johns Hopkins University.

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