Investors interested in Media Conglomerates stocks are likely familiar with Walt Disney (DIS) and Pearson (PSO). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Walt Disney and Pearson are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that DIS likely has seen a stronger improvement to its earnings outlook than PSO has recently. But this is just one piece of the puzzle 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.
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.
DIS currently has a forward P/E ratio of 20.71, while PSO has a forward P/E of 20.79. We also note that DIS has a PEG ratio of 2.01. 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. PSO currently has a PEG ratio of 3.08.
Another notable valuation metric for DIS is its P/B ratio of 1.93. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, PSO has a P/B of 2.24.
Based on these metrics and many more, DIS holds a Value grade of B, while PSO has a Value grade of C.
DIS stands above PSO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DIS is the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
