Critical Survey: Pearson (PSO) and Its Competitors

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

Institutional and Insider Ownership

2.1% of Pearson shares are owned by institutional investors. Comparatively, 39.0% of shares of all “MEDIA CONGLOM” companies are owned by institutional investors. 0.1% of Pearson shares are owned by company insiders. Comparatively, 16.8% of shares of all “MEDIA CONGLOM” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

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

Earnings & Valuation

This table compares Pearson and its competitors gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Pearson	$4.54 billion	$554.61 million	15.88
Pearson Competitors	$9.88 billion	-$285.69 million	-33.48

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.

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	0.82%	-70.71%	1.87%

Dividends

Pearson pays an annual dividend of $0.44 per share and has a dividend yield of 2.9%. 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 2.7% 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.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Pearson and its competitors, as provided 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	1584	39	2.50

Pearson currently has a consensus price target of $18.00, indicating a potential upside of 20.56%. As a group, “MEDIA CONGLOM” companies have a potential upside of 9.60%. Given Pearson’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Pearson is more favorable than its competitors.

Summary

Pearson beats its competitors on 8 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.