Sony Corporation (ADR) (SNE) Could Deliver More Returns For Its Shareholders

Sharp is trading at $4.20 per share, with the total market cap of around $4.8 billion. Because of the low profit generation and high debt amount, Sharp’s EBITDA multiple is quite high, at as much as 58.5. However, it has the highest price-to-book valuation at 3.2.

Recently, Sharp announced that it has entered the strategic agreement with China Electronics to set up the joint venture for the production of 8^thgeneration LCD panels to meet the fast growing demand of LCD panels in China. The company expects that, with the combination of Sharp’s advanced LCD technology and highly efficient technology of China Electronics, Sharp could supply highly competitive LCD panels in a stable and timely manner, growing its LCD business in China, the largest market in the world.

Panasonic has a lower EBITDA multiple, but higher book value than Sony Corporation (ADR) (NYSE:SNE). At $8.50 per share, Panasonic is worth $19.60 billion. The market values Panasonic at 4.46 times its trailing EBITDA and 1.25 times its book value.

Panasonic had quite an ambitious plan to grow its business in the next three years. The company targeted to generate more than ¥350 ($3.49) billion in operating profit with cumulative free cash flow of more than ¥600 ($5.98) billion. In order to reach its target, Panasonic would spend around ¥250 ($2.49) billion to implement business restructuring, eliminating unprofitable business to improve the general profitability with a goal of 5% in operating profit margin in each business division.

My Foolish take

Sony Corporation (ADR) (NYSE:SNE), with the lowest price-to-book valuation, could be a good opportunistic play for long-term shareholders. The spinoff of the Entertainment business will unlock the potential shareholders’ value, combined with the profitability of both the Electronics business will further boost Sony’s share price in the near future.

The article Sony Could Deliver More Returns For Its Shareholders originally appeared on Fool.com and is written by Anh HOANG.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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