Can Sony Be the Stock It Once Was?

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With shares of Sony (NYSE:SNE) trading around $16, is SNE an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Sony is involved in the electronics, games, entertainment, and financial businesses. The company operates in several different segments: Consumer Products Services, Professional Device Solutions, Movie, Music, Finance, Mobile, and Other. Through its segments, Sony is able to provide a wide range of products and services. These products include televisions, cameras, personal computers, game consoles, navigation systems, audio and video equipment, software, phones, and media platforms. The company brings new technologies to the hands of the average player as well as professional users. Look for Sony to continue to be a top choice for avid technology adopters worldwide.

The latest manufacturer to join the selfie craze, Sony has equipped its new Xperia C3 smartphone with a 5-megapixel front camera and editing tools dedicated specifically to touching up self-portraits. Sony claims that this new mid-range model is “the world’s best selfie smartphone,” mainly thanks to its wide angle front camera with a 5MP sensor, a soft LED flash designed for use in any lighting conditions, and an auto mode. The Xperia C3 also comes with a photo editing app geared towards touching up portraits, allowing users to adjust light levels and even apply virtual makeup.

T = Technicals on the Stock Chart Are Weak

Sony stock has seen its fair share of struggles over the past few years. The stock is currently trading sideways and may need time to stabilize before heading higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Sony is trading below its rising key averages, which signals neutral to bearish price action in the near-term.

Source: Thinkorswim

Taking a look at the implied volatility (red) and implied volatility skew levels of Sony options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Sony Options

29.94%

96%

94%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

August Options

Steep

Average

September Options

Steep

Average

As of Friday, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

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