Comparing Pearson (PSO) and Its Peers

Pearson (NYSE:PSO) is one of 25 public companies in the “MEDIA CONGLOM” industry, but how does it contrast to its competitors? We will compare Pearson to similar companies based on the strength of its analyst recommendations, institutional ownership, earnings, risk, profitability, valuation and dividends.

Risk and Volatility

Pearson has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, Pearson’s competitors have a beta of 3.78, meaning that their average share price is 278% more volatile than the S&P 500.

Profitability

This table compares Pearson and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pearson	N/A	N/A	N/A
Pearson Competitors	-0.69%	-71.10%	1.71%

Dividends

Pearson pays an annual dividend of $0.44 per share and has a dividend yield of 3.0%. Pearson pays out 46.8% of its earnings in the form of a dividend. As a group, “MEDIA CONGLOM” companies pay a dividend yield of 2.8% and pay out 87.4% of their earnings in the form of a dividend. Pearson is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Pearson and its competitors top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Pearson	$4.54 billion	$554.61 million	15.38
Pearson Competitors	$9.88 billion	-$287.07 million	-33.36

Pearson’s competitors have higher revenue, but lower earnings than Pearson. Pearson is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Institutional & Insider Ownership

2.1% of Pearson shares are owned by institutional investors. Comparatively, 41.3% of shares of all “MEDIA CONGLOM” companies are owned by institutional investors. 0.1% of Pearson shares are owned by company insiders. Comparatively, 14.6% of shares of all “MEDIA CONGLOM” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for Pearson and its competitors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pearson	0	0	1	1	3.50
Pearson Competitors	269	884	1580	39	2.50

Pearson presently has a consensus target price of $18.00, suggesting a potential upside of 24.48%. As a group, “MEDIA CONGLOM” companies have a potential upside of 11.69%. Given Pearson’s stronger consensus rating and higher possible upside, analysts clearly believe Pearson is more favorable than its competitors.

Summary

Pearson beats its competitors on 9 of the 15 factors compared.

About Pearson

Pearson plc offers educational courseware, assessments, and services in the United Kingdom, the United States, Canada, the Asia Pacific, other European countries, and internationally. The company operates through five segments: Assessment & Qualifications, Virtual Learning, English Language Learning, Workforce Skills, and Higher Education. The Assessment & Qualifications segment offers Pearson VUE, US student assessment, clinical assessment, UK GCSE, and A levels and international academic qualifications and associated courseware. The Virtual Learning segment provides virtual schools and online program management services. The English Language Learning segment offers Pearson test of English, institutional courseware, and English online solutions. The Workforce Skills offers BTEC, GED, TalentLens, Faethm, Credly, Pearson college, and apprenticeships. The Higher Education segment engages in the US, Canadian, and international higher education courseware businesses. The company was founded in 1844 and is headquartered in London, the United Kingdom.