Sony (SNE) & Knowles (KN) Critical Review

Sony (NYSE: SNE) and Knowles (NYSE:KN) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Dividends

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Sony pays an annual dividend of $0.10 per share and has a dividend yield of 0.2%. Knowles does not pay a dividend. Sony pays out 19.6% of its earnings in the form of a dividend. Sony has raised its dividend for 2 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Sony and Knowles, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sony 0 4 2 1 2.57
Knowles 0 2 4 0 2.67

Sony presently has a consensus target price of $55.41, suggesting a potential upside of 11.77%. Knowles has a consensus target price of $17.33, suggesting a potential upside of 55.32%. Given Knowles’ stronger consensus rating and higher possible upside, analysts clearly believe Knowles is more favorable than Sony.

Earnings & Valuation

This table compares Sony and Knowles’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sony $67.89 billion 0.92 $681.58 million $0.51 97.20
Knowles $744.20 million 1.34 $68.30 million $0.70 15.94

Sony has higher revenue and earnings than Knowles. Knowles is trading at a lower price-to-earnings ratio than Sony, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

7.0% of Sony shares are owned by institutional investors. 7.0% of Sony shares are owned by company insiders. Comparatively, 3.7% of Knowles shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Sony and Knowles’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sony 6.29% 15.00% 2.73%
Knowles 8.32% 6.28% 4.30%

Volatility and Risk

Sony has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500. Comparatively, Knowles has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Summary

Sony beats Knowles on 10 of the 18 factors compared between the two stocks.

About Sony

Sony Corporation designs, develops, manufactures, and sells electronic equipment, instruments, and devices for consumer, professional, and industrial markets worldwide. It offers LCD televisions, optical pickups, mobile phones, tablets, audio equipment and video conference systems, batteries, broadcast and professional-use video equipment, and DVD-players/recorders; and Blu-ray Disc players and recorders, ROMs, CDs, DVDs, and UMDs. The company also provides Internet broadband network services to subscribers, as well as creates and distributes content through its portal services to various electronics product platforms, such as PCs and mobile phones; and interchangeable lens cameras, compact digital cameras, and consumer and professional video cameras, as well as display products comprising projectors and medical equipment. In addition, it offers PlayStation hardware, including home and portable game consoles; network services relating to game, video, and music content; and packaged software and peripheral devices, as well as complementary metal oxide semiconductor image sensors, charge-coupled devices, large-scale integration systems, and other semiconductors. Further, the company produces, acquires, and distributes live-action and animated motion pictures, as well as television programming, including scripted series, daytime serials, game shows, animated series, made for television movies and miniseries, and other programming; operates a visual effects and animation unit; manages a studio facility; and operates television and digital networks. Additionally, it produces and distributes recorded music, animation titles, and game applications; engages in music publishing business; and provides life and non-life insurance, savings products, and loans. The company was formerly known as Tokyo Tsushin Kogyo Kabushiki Kaisha and changed its name to Sony Corporation in January 1958. Sony Corporation was founded in 1946 and is headquartered in Tokyo, Japan.

About Knowles

Knowles Corporation designs, manufactures, and sells micro-acoustic, audio processing, and precision device solutions to the mobile consumer electronics, industrial, defense, aerospace medical, and telecommunications markets worldwide. The company operates in two segments, Audio and Precision Devices. The Audio segment designs and manufactures audio products, including microphones and balanced armature speakers, signal processing technologies, and software and algorithms used in applications that serve the mobile, ear, and Internet of Things markets. This segment also offers analog and digital micro-electro-mechanical systems, and electret condenser and smart microphones; and ultrasonic sensors and acoustic processors, as well as transducer products used primarily in hearing health and headset applications. The Precision Devices segment designs and delivers engineered capacitors and radio frequency devices for technically demanding applications, such as power supplies, radar, medical implants, and satellites for the industrial, defense, aerospace, medical, and telecommunications markets. The company also provides single layer electronic components to the radio frequency device, microwave, telecommunication, fiber optics, defense, and aerospace markets. It sells its products directly to original equipment manufacturers and to their contract manufacturers and suppliers, as well as through distributors. Knowles Corporation was founded in 1946 and is headquartered in Itasca, Illinois.

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