Sony Group Corporation (SONY Quick QuoteSONY - Free Report) is scheduled to report third-quarter fiscal 2021 results on Feb 2, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 4.7%. It pulled off a trailing four-quarter earnings surprise of 100.7%, on average.

Factors at Play

The Japan-based company is expected to have recorded year-over-year higher revenues on the back of sales growth in the Game & Network Services (G&NS) and Pictures segments. Also, solid traction in the Electronics Products & Solutions (EP&S) and Music segments is likely to have boosted the performance.

Further, Sony’s EP&S segment is expected to have benefited from an increase in sales of televisions and smartphones with an improvement in the product mix. The Music segment is likely to have gained from a rise in sales of recorded music and visual media and platform. Moreover, an increase in revenues from paid subscription streaming and advertising-supported streaming services might have acted as tailwinds.

The G&NS segment is expected to have benefited from an increase in sales of hardware and non-first-party titles, including add-on content. The Pictures segment is likely to have gained from a rise in sales for media networks resulting from Crunchyroll acquisition and television productions. Higher sales for motion pictures might have been a vital factor as well. These factors are expected to have positively impacted Sony’s top line in the quarter.

For the December quarter, the Zacks Consensus Estimate for revenues is pegged at $26,008 million, which indicates growth of 0.7% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share is pegged at $1.56, which suggests a decline of 40.9%.

Key Q3 Developments

During the quarter, Sony’s subsidiary, Sony Semiconductor Solutions Corporation, unveiled AITRIOS edge AI sensing platform in the United States, Japan and Europe. The unique offering has been designed to streamline the development and implementation of AI camera-driven and other sensing solutions.

Sony Semiconductor Solutions Corporation (“SSS”) and TSMC collaborated to set up a unit, Japan Advanced Semiconductor Manufacturing, Inc. (“JASM”), in Kumamoto, Japan. The subsidiary will offer foundry service with initial technology of 22/28-nanometer processes to address the global market demand for specialty technologies.

SSS plans to make an equity investment in JASM of about $0.5 billion, which will represent a less than 20% equity stake in JASM. The facility is expected to create high-tech professional jobs, with its construction scheduled to commence in 2022 and production targeted to begin by the end of 2024.

Also, Sony Pictures Entertainment (“SPE”) completed the transfer of GSN Games, a wholly-owned subsidiary of SPE, to Scopely as of Dec 6, 2021. Sony expects to record a gain of nearly ¥65 billion resulting from the transfer. Sony Semiconductor Solutions developed the world’s first stacked CMOS image sensor technology with 2-Layer Transistor Pixel. Markedly, the new pixel structure will allow pixels to maintain or improve their existing properties at current and smaller pixel sizes.

In third-quarter fiscal 2021, Sony Pictures Networks India Private Ltd (“SPNI”) inked an agreement to combine Zee Entertainment Enterprises Ltd. (“ZEEL”) with SPNI. Earlier in September, the two companies inked a non-binding term sheet to combine their linear networks, digital assets, production operations and program libraries. After the merger, the new entity will be publicly listed in the domicile country. Sony expects this transaction to close after the fiscal year ending Mar 31, 2022.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Sony this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Sony Corporation Price and EPS Surprise

Zacks Rank: Sony currently has a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Schneider National, Inc. (SNDR Quick QuoteSNDR - Free Report) is slated to release fourth-quarter 2021 results on Feb 3. It has an Earnings ESP of +2.34% and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Schneider has a long-term earnings growth expectation of 20.7%. With a VGM Score of A, SNDR shares have gained 16.1% in the past year. The company delivered a trailing four-quarter earnings surprise of 21%, on average.

Murphy USA Inc. (MUSA Quick QuoteMUSA - Free Report) is scheduled to release fourth-quarter 2021 results on Feb 2. The company has an Earnings ESP of +28.82% and flaunts a Zacks Rank #1, at present.

Murphy USA also boasts a VGM Score of A. MUSA shares have soared 54.7% in the past year. The company delivered a trailing four-quarter earnings surprise of 20.9%, on average.

Saia, Inc. (SAIA Quick QuoteSAIA - Free Report) has an Earnings ESP of +1.01% and a Zacks Rank of 2. The company is set to report fourth-quarter 2021 results on Feb 2.

Saia has a long-term earnings growth expectation of 35.7%. SAIA shares have gained 47.5% in the past year. The company delivered a trailing four-quarter earnings surprise of 14.8%, on average.

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