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PSO vs. DIS: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Pearson has a Zacks Rank of #2 (Buy), while Walt Disney has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PSO is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

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Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

PSO currently has a forward P/E ratio of 16.68, while DIS has a forward P/E of 25.82. We also note that PSO has a PEG ratio of 0.95. 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 1.30.

Another notable valuation metric for PSO is its P/B ratio of 1.22. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, DIS has a P/B of 1.88.

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
 
The Walt Disney Company (DIS) : Free Stock Analysis Report
 
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Zacks Investment Research