Barron’s (Nov. 13, 17′) recently recommended Sony for a good buy, here is my two hours quick analysis,
- My overall conviction: wait for price to dip t0 below $40
- valuation: fair or over priced at p/b, FCF, p/s and PL value; relatively low on EV/EBITDA and price/owner’s earnings
- financial strength: neutral, with very low Altman Z-score
- Profitability & growth: overall oper margin and profit margin is single digit, margin in camera chips and gaming are double digit, ROE% is 10.3%
- Ratios: current ratio 0.86 and quick ratio 0.71 is low which is not good, days inventory are trending down which is good
- possible catalysts:
- a hit movie or two
- spin off entertainment segment (this segment is losing money)
- weak yan creates near-term tailwind
Personalized Checklist
| Checklist Items / Related Parameters | |||||
|---|---|---|---|---|---|
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Within your circle of competence?
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4 | ||||
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Macro economic environment favorable?
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4 | ||||
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High quality business?
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4 | ||||
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Enough margin of safety with stocks?
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2 | ||||
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Gurus are buying?
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3 | ||||
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Insiders are buying?
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1 | ||||
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Management capable and shareholder friendly?
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4 | ||||
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Catalyst for stock price to appreciate?
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4 | ||||
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Your level of confidence with the research?
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3 | ||||
Checked: 9 / 9 – Total Score: 3.2 / 5
Invest like a guru Checklist
| Checklist Items / Related Parameters | |||||
|---|---|---|---|---|---|
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Do I understand the business?
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4 | ||||
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What is the economic moat that protects the company so it can sell the same or a similar product five or ten years from today?
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4 | ||||
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Is this a fast-changing industry?
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4 | ||||
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Does the company have a diversified customer base?
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5 | ||||
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Is this an asset-light business?
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3 | ||||
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Is it a cyclical business?
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5 | ||||
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Does the company still have room to grow?
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4 | ||||
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Has the company been consistently profitable over the past ten years, through good times and bad?
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1 | ||||
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Does the company have a stable double-digit operating margin?
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1 | ||||
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Does the company have a higher margin than competitors?
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3 | ||||
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Does the company have a return on investment capital of 15% percent or higher over the past decade?
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1 | ||||
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Has the company been consistently growing its revenue and earnings at double digits?
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1 | ||||
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Does the company have a strong balance sheet?
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2 | ||||
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Do company executives own decent shares of stock of the company?
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1 | ||||
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How are the executives paid compared with other similarly sized companies?
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3 | ||||
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Are insiders buying?
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1 | ||||
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Is the stock valuation reasonable as measured by intrinsic value, or P/E ratio?
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2 | ||||
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How is the current valuation relative to historical range?
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4 | ||||
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How did the company’s stock price fare during the previous recessions?
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3 | ||||
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How much confidence do I have in my research?
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3 | ||||
