The most recent earnings update Sony Corporation’s (NYSE:SNE) released in September 2017 indicated that the company experienced a significant headwind with earnings falling by -50.41%. Today I want to provide a brief commentary on how market analysts perceive Sony’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. See our latest analysis for Sony
Analysts’ expectations for the coming year seems positive, with earnings rising by a significant 56.99%. Earnings are predicted to shoot up to around ¥439,445.5M in the following year before plateauing, heading into 2020.
Even though it is informative understanding the growth rate each year relative to today’s value, it may be more beneficial estimating the rate at which the earnings are rising or falling every year, on average. The pro of this approach is that we can get a bigger picture of the direction of Sony’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 7.19%. This means, we can presume Sony will grow its earnings by 7.19% every year for the next couple of years.
Next Steps:
For Sony, I’ve compiled three key factors you should look at:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is SNE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SNE is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SNE? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.