Zacks Industry Outlook Highlights: Sony, Panasonic, Dolby and Sonos
Zacks Industry Outlook Highlights: Sony, Panasonic, Dolby and Sonos
For Immediate Release
Companies in the Zacks Audio Video Production industry are concentrating on the premium segment of the branded products market for profitable growth. These industry players continue to benefit from a comprehensive product portfolio and direct-to-consumer strategy, driven by an accretive customer base. The firms have been working to expand their global footprint in emerging markets and are focused on scaling up their customer relationship management efforts.
Sony, Panasonic, Dolby and Sonos are likely to benefit from investments in avant-garde technology solutions that transform entertainment and communication experiences for end users.
The Zacks Audio Video Production industry comprises manufacturers of televisions, speakers, video players, and camcorders. It includes companies that offer gaming consoles, drones, and high-end cameras for individuals and industrial markets around the world.
These firms provide state-of-the-art audio, imaging, and voice technologies that enhance entertainment and communication experiences. Some industry participants design audio and imaging products, including digital cinema servers and products for film production and entertainment industries.
They have digital assets, production operations, and program libraries as well as proprietary software solutions. Apart from providing a host of services for television production for cinema exhibition, broadcast and home entertainment, these corporations work with film studios, content creators, and post-production facilities.
What's Shaping the Future of Audio Video Production Industry
Technological Advancement to Spur Growth: Over the years, the shift to digital technology has catered to the demand for high-resolution video, reduced the problems of radio frequency and electromagnetic interference, making audio-visual systems more data-network friendly. Wireless transmission has enabled the broadcast of audio and video signals through wireless data networks in a seamless manner while enhancing productivity.
The industry players have been offering services to diverse media producers. That said, easy online accessibility of recording equipment and the widespread availability of distribution channels on the Internet pose challenges.
Changing Consumer Preferences: In the United States, smart-connected televisions, cameras, microphones, and speaker enclosures are the most popular electronic devices among customers. The U.S. manufacturers of audio and video systems face competition from importers of comparatively low-priced devices, particularly from China, Vietnam, and Mexico.
Nonetheless, these companies are benefiting from investments in avant-garde technology solutions that transform entertainment and communication experiences for end users. Furthermore, stability among the producers and advertisers will enable the entertainment industry to take advantage of growing consumer disposable income levels.
Increasing Demand for Premium Entertainment: The industry has performed well despite drastic changes in how media is consumed and distributed. The companies have also rebounded after witnessing sluggish growth due to a slowdown in TV and film production, which resulted from the pandemic. The long-term growth drivers are in place, with the economy getting back on track followed by an improving macroeconomic environment.
The rise in demand for premium entertainment from record labels, TV producers, and advertisers is likely to stoke profitable growth. Demand for video post-production services will increase in the coming days as the downstream market continues to grow. Strong demand across all regions with a more direct-to-consumer, subscription-centric model bode well for the industry participants.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Audio Video Production industry is housed within the broader Zacks Consumer Discretionary sector. It currently has a Zacks Industry Rank #79, which places it at the top 31% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates strong near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is an outcome of a positive earnings outlook for the constituent companies. Looking at the aggregate earnings estimate revisions, it appears that analysts have gained confidence in this group’s earnings growth potential. Over the past year, the industry’s earnings estimates for the current year and the next have increased 50.9% and 19.4%, respectively.
Before we present a few audio video production stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.
Industry Outperforms Sector, S&P 500
The Zacks Audio Video Production industry has outperformed both the broader Zacks Consumer Discretionary sector and the S&P 500 composite in the past year.
The industry has returned 46.6% over this period compared with the S&P 500’s rise of 35.1%. The broader sector has gained 15.1%.
Industry's Current Valuation
Price-to-Sales is commonly used for valuing audio video production stocks. The industry currently has a trailing 12-month P/S of 1.32X compared with the S&P 500’s 5.04X. It is also below the sector’s trailing 12-month P/S of 3.07X.
Over the past five years, the industry has traded as high as 1.43X and as low as 0.51X with a median of 0.79X.
4 Audio Video Production Stocks to Watch
Sony Group: Headquartered in Tokyo, Japan, Sony makes electronic devices for the consumer and industrial markets worldwide. The company’s Electronics Products & Solutions segment is benefiting from an increase in sales of televisions and digital cameras.
The Music segment is witnessing an increase in sales for recorded music and music publishing. The Game & Network Services segment is also witnessing an increase in sales of hardware and peripheral devices. Sony Pictures Networks India and Zee Entertainment Enterprises Ltd. have recently inked a non-binding term sheet to combine their linear networks, digital assets, production operations, and program libraries.
The merged entity would be better positioned to lead the consumer transition from traditional pay TV into the digital future. Sony Semiconductor Solutions has announced the upcoming launch of the IMX459 loaded single-photon avalanche diode depth sensor for automotive Light Detection and Ranging applications using the direct Time-of-Flight method.
These developments are likely to aid Sony’s performance, going forward. The Zacks Consensus Estimate for its current-year earnings has been revised 1.4% upward over the past 30 days. The stock has gained 49.5% in the past year. It currently carries a Zacks Rank #3 (Hold).
Panasonic: Headquartered in Kadoma, Japan, Panasonic sells and services various electronic products globally. It operates through five segments — Appliances, Life Solutions, Connected Solutions, Automotive, and Industrial Solutions. It recently completed the acquisition of Blue Yonder, a leading digital fulfillment platform provider. The buyout enhances Panasonic’s own digital transformation and customer-centric focus.
The company has introduced a new large-aperture wide fixed focal length lens, the LUMIX S 24mm F1.8. Panasonic has also unveiled the SoundSlayer Wearable Immersive Gaming Speaker System, SC-GN01. The consensus estimate for its current-year earnings has been revised 6.7% upward over the past 30 days. The stock has returned 49.1% in the past year. It carries a Zacks Rank #2 (Buy).
Dolby: Headquartered in San Francisco, CA, Dolby creates audio and imaging technologies that transform entertainment and communication experiences. It is witnessing an increasing momentum in Dolby content through its partnerships.
The company has expanded its reach within music and gaming. Vimeo, the world’s leading all-in-one video software solution, recently announced a first-to-market launch with Dolby, to enable hosting, sharing, and playback of videos created in Dolby Vision on Apple devices. Dolby and Cinemo, a leading global provider of automotive infotainment middleware, have announced a collaboration to accelerate the integration of Dolby Atmos into vehicles.
Dolby’s growth strategy stands on three pillars — advancing the science of sight and sound, providing creative solutions, and delivering superior experiences. The consensus estimate for its current-year earnings has been revised 3.4% upward over the past 60 days. The stock has moved up 42.7% in the past year. It carries a Zacks Rank #3.
Sonos: Headquartered in Santa Barbara, CA, Sonos is the world’s leading sound experience company. It is benefiting from robust demand for its products in the growing global audio market.
The company is focused on its three strategic initiatives — the expansion of its brand, increasing its offerings, and driving operational excellence. It recently announced Beam (Gen 2), the latest version of its compact smart soundbar for TV, music, and gaming. The new Beam delivers a more immersive sound experience with greater depth and clarity, as well as support for Dolby Atmos.
Sonos is well-positioned to deliver significant free cash flow and increased shareholder value over the long term. The consensus estimate for its current-year earnings has been revised 30.6% upward over the past 60 days. The stock has soared 152.3% in the past year. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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