The demand for consumer electronics surged last year as the need for connected, high-end devices increased amid the COVID-19 pandemic, with people spending most of their time at home. However, because investors have been rotating away from expensive tech stocks this year to capitalize on the economic recovery by betting on cyclical stocks, many consumer electronic stocks are currently trading at much lower and more attractive prices.
The consumer electronics market is expected to continue growing in the coming months because many consumers are still upgrading their homes and seeking advanced devices to facilitate their “new normal” living. According to a report by MarketWatch, the consumer electronics and appliances market is expected to grow at a 5.08% CAGR between 2021- 2025.
Because the prospects of the consumer electronics market look promising, we think it could be wise to bet now on the shares of the two top players in the space—Sony Group Corporation (SONY) and Panasonic Corporation (PCRFY). These stocks are currently trading significantly below their 52-week highs.
Sony Group Corporation (SONY)
One of the top players in the electronic equipment space, SONY develops and manufactures a wide range of products. The company, based in Japan, distributes software titles and add-on content through digital networks, home and portable game consoles, mobile phones and tablets, among others.
On May 18, Sony Music Entertainment, a wholly owned subsidiary of SONY, completed the acquisition of 100% of the shares and related holdings of certain subsidiaries of Kobalt Music Group Limited, referred to as AWAL. This acquisition could drive further growth by the company.
SONY’s sales and operating revenue increased 8.9% year-over-year to 8,999.36 billion yen ($82.24 billion) for its fiscal year ended March 31, 2021. Its operating income grew 14.9% year-over-year to 971.86 billion yen ($8.88 billion), while its net income increased 91.4% year-over-year to 1,191.37 billion yen ($10.89 billion). The company’s EPS increased 103.1% year-over-year to 936.90 yen.
Analysts expect SONY’s EPS and revenue to increase 100.7% and 9.9%, respectively, year-over-year to $8.53 and $81.72 billion in its fiscal year 2021. It surpassed consensus EPS estimates in three of the trailing four quarters. The stock has soared 58.1% over the past year to close yesterday’s trading session at $99.57. It is currently trading nearly 16% below its 52-week high of $118.50, which it hit on February 5, 2021.
SONY’s POWR Ratings reflect this promising outlook. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Momentum and Stability. Within the Entertainment – Media Producers industry, SONY is ranked #4 of 18 stocks. To see SONY’s ratings for Growth, Value, Sentiment and Quality as well, click here.
Panasonic Corporation (PCRFY)
Headquartered in Kadoma, Japan, PCRFY is another top player in the consumer electronics space. It develops, produces, and sells various electronic products worldwide. It operates through five segments: Appliances, Life Solutions, Connected Solutions, Automotive, and Industrial Solutions. The company’s offerings include air conditioners, refrigerators, microwave ovens and other products.
On April 23, PCRFY announced that it has agreed to acquire Blue Yonder, a leading end-to-end, digital fulfillment platform provider. This acquisition strengthens its portfolio and accelerates the companies’ shared Autonomous Supply Chain mission, empowering consumers to optimize their supply chains using the combined power of AI/ML and internet of things (IoT) and edge devices.
The company’s sales were negatively affected when the global economy saw a decline in consumption and investment resulting from the prolonged impact of COVID-19. However, PCRFY’s operating profit in its appliances segment increased 187% year-over-year to 104.3 billion yen ($953.09 million) for its fiscal year, ended March 31, 2021. Its total assets increased 10.1% year-over-year to 6,847.07 billion yen ($62.57 billion). Its operating income grew 14.9% year-over-year to 971.86 billion yen ($8.88 billion). Also, its operating profit in the automotive segment came in at 10.9 billion yen ($99.6 million) compared to a 45.6 billion yen ($416.69 million) operating loss in the prior-year period.
For the quarter ending June 30, 2021, analysts expect PCRFY’s EPS and revenue to increase 425% and 18.2%, respectively, year-over-year to $0.13 and $14.8 billion. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has soared 28.8% over the past year to close yesterday’s trading session at $11.48. It is currently trading 21% below its 52-week high of $14.55, which it hit on February 16, 2021.
It’s no surprise that PCRFY has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Value, and a B grade for Growth, Stability and Momentum.
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SONY shares were trading at $99.71 per share on Friday afternoon, up $0.14 (+0.14%). Year-to-date, SONY has declined -1.37%, versus a 12.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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