Sony Vs. Canon: Which Consumer Electronics Stock Is A Better Buy?

Recent Financial Results

During the third quarter, which ended December 31, 2020, SNE’s total sales increased 10.2% year-over-year to ¥2.7 billion. The company’s operating income grew 19.7% its  year-ago value to ¥359.22 million. Its EPS rose to ¥301.09 from ¥187.02, and it reported Electronics Products & Solutions’ revenue of ¥ 648.99 million during this period.

In comparison, CAJ’s net sales declined 12.1% year-over-year to ¥3.16 billion in the year ended December 31. Also, the company’s operating profit declined 36.6% from its  year-ago value to ¥ 110.55 million, while its net income declined 33.3%. The company’s operating expenses decreased by 11.9% year-over-year to ¥1.27 billion, due mainly to better cost control across the  entire group.

Past and Expected Financial Performance

SNE’s EPS and tangible book value grew at CAGR of 27.6% and 24.3%, respectively, over the past three years. In comparison, CAJ’s EPS and tangible book have declined at CAGRs of 29.1% and 3.9%, respectively over this period.

Analysts expect SNE’s revenue to increase 20.2% in the current quarter, 10.4% in the current year and 3.5% next year. Its EPS is estimated to increase 210% in the quarter ending March 30, 2021, and 100.5% in fiscal 2021.

CAJ’s revenue is expected to increase 12.2% in the current quarter, and 7.4% in 2021. A consensus EPS estimate of $0.29 for the quarter ending March 30, 2021 represents a 52.6% improvement versus the same period last year.

Profitability      

SNE’s trailing-12-month revenue is more than two times CAJ’s. But CAJ is more profitable with a gross profit margin of 43.5% versus SNE’s 27.9%.

However, SNE’s ROE and ROA of 21.3% and 2.5%, respectively, compare favorably with CAJ’s 3.4% and 1.5%.

Valuation

In terms of trailing-12-month price/sales, SNE is currently trading at 1.53x, 98.7% higher than CAJ, which is currently trading at 0.77x. Also, its trailing-12-month ev/sales of 1.68x is 95.3% higher than CAJ’s 0.86x. SNE is also more expensive in terms of trailing-12-month price/cash flow (8.20x vs 7.30x).

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