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 offers value investors a better bang for their buck right now? We’ll need to take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Pearson and Walt Disney are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that PSO’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PSO currently has a forward P/E ratio of 15.20, while DIS has a forward P/E of 23.83. We also note that PSO has a PEG ratio of 1.45. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. DIS currently has a PEG ratio of 2.02.
Another notable valuation metric for PSO is its P/B ratio of 1.44. 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 1.63.
These are just a few of the metrics contributing to PSO’s Value grade of B and DIS’s Value grade of C.
PSO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PSO is likely the superior value option right now.
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Pearson, PLC (PSO) : Free Stock Analysis Report
The Walt Disney Company (DIS) : Free Stock Analysis Report