Sony Group Corp. SONY reported mixed first-quarter fiscal 2021 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same.

Net Income

On a GAAP basis, net income in the June quarter increased 9.4% year over year to ¥211.8 billion ($1,934 million) or ¥169.22 ($1.55) per share. The bottom line beat the Zacks Consensus Estimate by 51 cents.

Adjusted net income came in at ¥220.4 billion compared with ¥190.6 billion in the prior-year quarter.

Sony Corporation Price, Consensus and EPS Surprise

Sony Corporation price-consensus-eps-surprise-chart | Sony Corporation Quote

Revenues

Quarterly aggregate revenues increased 15% year over year to ¥2,256.8 billion ($20,619 million). The rise was driven by significant increases in Electronics Products & Solutions (EP&S) and Music segments sales. The top line, however, missed the consensus estimate of $21,291 million.

Segment Results

Game & Network Services (G&NS) sales grew 1.6% year over year to ¥615.8 billion, driven by an increase in sales of hardware and peripheral devices and a positive impact of foreign exchange rates. The segment’s operating income was ¥83.3 billion compared with ¥123.9 billion in the prior-year quarter.

Music sales increased 43.9% year over year to ¥254.9 billion, driven by higher sales for Recorded Music and Music Publishing as well as higher sales for Visual Media and Platform. Operating income was ¥55.4 billion, which improved from ¥35.6 billion in the prior-year quarter.

Pictures sales increased 16.9% year over year to ¥204.7 billion. This was driven by higher sales for Media Networks with an increase in advertising and subscription revenues as well as higher sales for Motion Pictures. Operating income was ¥25.4 billion compared with ¥27 billion a year ago.

EP&S sales came in at ¥576.3 billion, up 59.5% year over year, driven by an increase in sales of televisions, digital cameras and Audio and Video due to an improvement in the product mix and rise in unit sales. Operating income was ¥71.8 billion against a loss of ¥8.9 billion in the year-ago quarter.

Imaging & Sensing Solutions (I&SS) sales were up 5.8% year over year to ¥218.1 billion, driven by an increase in unit sales of image sensors for digital cameras due to the recovery from the impact of COVID-19. Operating income was ¥30.5 billion compared with ¥26.2 billion in the prior-year quarter.

Financial Services sales fell 5.9% year over year to ¥414.4 billion due to decrease in revenues at Sony Life. Operating income was ¥24 billion compared with ¥36 billion in the year-ago quarter.

All Other sales were down 13% to ¥22 billion. Operating income was ¥4.2 billion compared with ¥3.5 billion a year ago.

Other Details

Total expenses were ¥1,981 billion, up 13.8% year over year. Operating income was ¥280.1 billion, up 26.3%.

Cash Flow & Liquidity

During the first quarter of fiscal 2021, Sony generated ¥198.7 billion of cash from operating activities compared with ¥162.8 billion in the prior-year quarter.

As of Jun 30, 2021, the company had ¥1,725.2 billion ($15,577 million) in cash and cash equivalents with ¥1,045 billion ($9,435 million) of long-term debt.

FY21 Outlook

Sony has provided outlook for consolidated results for the fiscal year ending Mar 31, 2022. It expects sales of ¥9,700 billion, unchanged from the April forecast. Operating income is now projected to be ¥980 billion, increased from ¥930 billion. Net income is estimated to be ¥700 billion, up from ¥660 billion.

Zacks Rank & Stocks to Consider

Sony currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader sector are Clearfield, Inc. CLFD, Juniper Networks, Inc. JNPR and Qualcomm, Inc. QCOM. While Clearfield carries a Zacks Rank #1 (Strong Buy), Juniper and Qualcomm carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered a trailing four-quarter earnings surprise of 49%, on average.

Juniper pulled off a trailing four-quarter earnings surprise of 7.5%, on average.

Qualcomm delivered a trailing four-quarter earnings surprise of 13.5%, on average.

Conversion rate used:

¥1 = $0.009132 (period average from Apr 1, 2021 to Jun 30, 2021)

¥1 = $0.009029 (as of Jun 30, 2021)

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