Investors looking for stocks in the Media Conglomerates sector might want to consider either Pearson (PSO) or Walt Disney (DIS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Pearson is sporting a Zacks Rank of #2 (Buy), while Walt Disney has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PSO likely has seen a stronger improvement to its earnings outlook than DIS has recently. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
PSO currently has a forward P/E ratio of 14.48, while DIS has a forward P/E of 24.29. We also note that PSO has a PEG ratio of 1.42. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DIS currently has a PEG ratio of 1.80.
Another notable valuation metric for PSO is its P/B ratio of 1.43. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, DIS has a P/B of 1.59.
These metrics, and several others, help PSO earn a Value grade of A, while DIS has been given a Value grade of C.
PSO sticks out from DIS in both our Zacks Rank and Style Scores models, so value investors will likely feel that PSO is the better option right now.
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Pearson, PLC (PSO) : Free Stock Analysis Report
The Walt Disney Company (DIS) : Free Stock Analysis Report
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