NEW YORK (TheStreet) -- Shares of Sony Corp. (SNE) are higher by 5.08% to $21.29 at the start of trading on Tuesday, after the company announced its expects to increase its movie entertainment revenue by more than a third over the next three years, in an attempt to offset declining smartphone sales, Reuters reports.
The company's CEO, Kazuo Hirai, announced his intentions to unveil a long term growth plan before the end of March, but did not elaborate further, Reuters added.
Hirai gave revenue guidance for Sony Pictures Entertainment, the unit responsible for the film "The Amazing Spiderman," and the TV drama "Breaking Bad," saying they are aiming for $10 billion to $11 billion for March 2018. That is a 36% increase from the $8.1 billion estimated for this year, Reuters noted.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Over the next three years Sony is also looking for revenue of $4.8 billion to $5.2 billion from its music segment. The forecast for the music division for the current year is $4.8 billion, according to Reuters.
Sony's movie and music segments are said to account for 18% of this year's overall sales, which is slightly more than the company's mobile business. Last month Sony's smartphone unit weighted on its second quarter financial results, Reuters said.
Separately, 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 revenue growth, increase in stock price during the past year and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.1%. Since the same quarter one year prior, revenues slightly increased by 3.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The current debt-to-equity ratio, 0.47, 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 0.59, displays a potential problem in covering short-term cash needs.
- The gross profit margin for SONY CORP is currently extremely low, coming in at 13.41%. 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 1.48% trails the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. 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.
- You can view the full analysis from the report here: SNE Ratings Report