PSO vs. DIS: Which Stock Is the Better Value Option?
Investors interested in Media Conglomerates stocks are likely familiar with Pearson (PSO) and Walt Disney (DIS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Pearson is sporting a Zacks Rank of #2 (Buy), while Walt Disney has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PSO has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 18.66, while DIS has a forward P/E of 27.15. We also note that PSO has a PEG ratio of 1.06. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DIS currently has a PEG ratio of 1.28.
Another notable valuation metric for PSO is its P/B ratio of 1.41. 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 2.05.
These are just a few of the metrics contributing to PSO's Value grade of B and DIS's Value grade of C.
PSO stands above DIS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PSO is the superior value option right now.
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Pearson, PLC (PSO) : Free Stock Analysis Report
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