Sony Group Corporation (NYSE: $SONY) is a Japanese conglomerate involved in the manufacture and distribution of electronics. It also produces entertainment content and offers financial services.
On Tuesday, May 14, 2024, Sony released its Q4 and full-year fiscal 2023 results to a positive market reception.
Sony Group Reports Earnings Beat in Q4
For the fourth quarter, Sony reported revenue of $3.4 trillion yen ($22.25B), beating estimates of 2.9 trillion yen ($18.54B). Net income came in at 189 billion yen, for an EPS of 153.6 yen, beating estimates of 136.95 billion yen and EPS of 131.5 yen.
The Gaming division saw a huge improvement, with operating income rising to 106 billion yen from 38.9 billion yen the previous year.
For the full year, Sony Group reported revenue of 13.2 trillion yen, an operating income of 1.21 trillion yen, and an operating income margin of 9.3%. Meanwhile, FY23 net income came in at 970.6 billion yen for an EPS of 785.68 yen.
Sony Group’s Full-Year Forecast
Sony expects FY24 revenue to decline 5% to 12.31 trillion yen. However, the operating income for the full year is expected to rise 5% to 1.28 trillion, for a 10.4% operating income margin, which would be a 1.1 basis points improvement.
Sony Group expects the Gaming division to see a 1.59% decline in sales to 4.2 trillion yen, driven by lower PS5 sales. According to the results announcement, PS5 sales totaled 4.5 million units in the fourth quarter of 2023. For the full year, the company sold 20.8 million units.
Sony stated that as of the end of March, its cumulative unit sales were 59.2 million for PS5 and 60 million for PS4, after a $100 price cut since its release. The company forecasts that FY24 PS5 unit sales will be around 18 million, marking a significant Y/Y decline.
Share Buyback and Stock Split
Sonly Group announced it plans to buy around 30 million of its shares for 250 billion yen. Additionally, it will perform a five for one stock split on October 1, 2024.
The split will occur on the Tokyo Stock Exchange, which will also impact Sony’s American depositary receipts (ADRs) on the NYSE. Holders of ADR shares will receive five ADRs for each ADR they have on October 8, 2024.
Sony Group Stock Performance
Following the release of its Q4 and fiscal 2023 results, Sony Group shares on the NYSE have gained 9.63% as of the close of trading on Wednesday, May 15, 2024. On Wednesday, the shares gained 2.77% to close at $83.48.
However, SONY shares are down 10.53% so far this year. In the past month, the stock has risen marginally by 0.61%, while in the past 52 weeks, SONY shares are down 11.01%, compared to the 26.44% gain of the SPX.
The short interest in SONY has declined by 24.49% in the past month to 1.48 shares as of April 30, 2024, representing 0.12% of the shares outstanding.
At the close of trading on Wednesday, May 15, the day’s volume was 2 million shares, above the three-month average of 839.59K. The shares have a market cap of $101.92B.
Analysts’ Outlook on SONY
Analysts are optimistic about the future of SONY stock, giving it an overall strong buy rating. They forecast a wide range for the stock, a high of $117.86 and a low of $108. Based on the last closing price, their average price target of $112.93 is a 35.28% upside.
Should You Buy Sony Group Stock?
Sony’s recent performance has been buoyed by a recent CNBC report that it was reassessing its bid for Paramount Global. With Paramount Global underperforming in numerous metrics, Sony Group’s stock price has remained unchanged for most of the year as investors adopt a wait-and-see strategy.
Commenting on the likelihood of Sony buying Paramount, Atul Goyal, an analyst at Jeffries, stated, “Disney acquired Fox but has failed to add any value since that acquisition. Our preference is a bid for Paramount does not materialize.”
Based on its recent upbeat results, recent updates on the Paramount sales, and optimistic forecast, SONY shares could be a great addition to your portfolio for medium and long-term returns.
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