Pearson, PLC (NYSE: PSO) and New Media Investment Group (NYSE:NEWM) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Volatility & Risk

Pearson, PLC has a beta of 0.26, indicating that its share price is 74% less volatile than the S&P 500. Comparatively, New Media Investment Group has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500.

Dividends

Pearson, PLC pays an annual dividend of $0.67 per share and has a dividend yield of 8.4%. New Media Investment Group pays an annual dividend of $1.40 per share and has a dividend yield of 10.5%. New Media Investment Group pays out -1,272.7% of its earnings in the form of a dividend. Pearson, PLC has increased its dividend for 2 consecutive years.

Valuation & Earnings

This table compares Pearson, PLC and New Media Investment Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pearson, PLC $6.25 billion 1.05 $1.09 billion N/A N/A
New Media Investment Group $1.27 billion 0.56 $144.35 million ($0.11) -121.09

Pearson, PLC has higher revenue and earnings than New Media Investment Group.

Analyst Ratings

This is a summary of current ratings and target prices for Pearson, PLC and New Media Investment Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pearson, PLC 5 4 2 0 1.73
New Media Investment Group 1 1 1 0 2.00

New Media Investment Group has a consensus price target of $16.00, indicating a potential upside of 20.12%. Given New Media Investment Group’s stronger consensus rating and higher probable upside, analysts clearly believe New Media Investment Group is more favorable than Pearson, PLC.

Insider and Institutional Ownership

2.0% of Pearson, PLC shares are held by institutional investors. Comparatively, 76.1% of New Media Investment Group shares are held by institutional investors. 5.3% of New Media Investment Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Pearson, PLC and New Media Investment Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pearson, PLC N/A N/A N/A
New Media Investment Group -0.64% 2.22% 1.22%

Summary

New Media Investment Group beats Pearson, PLC on 9 of the 15 factors compared between the two stocks.

Pearson, PLC Company Profile

Pearson plc (Pearson) is a learning company. The Company delivers learning through providing a range of educational products and services to institutions, governments, professional bodies and individual learners. The Company operates through three segments, which include North America, Core and Growth. The Company’s North America segment includes Courseware, Assessments and Services businesses in the United States and Canada. The Company’s Core segment includes Courseware, Assessments and Services businesses in more mature markets including the United Kingdom, Australia and Italy. The Company’s Growth segment includes Courseware, Assessments and Services businesses in emerging markets including Brazil, China, India and South Africa. The Company provides content, assessment and digital services to schools, colleges and universities, as well as professional and vocational education to learners to help increase their skills and employability prospects.

New Media Investment Group Company Profile

New Media Investment Group Inc. is a holding company. The Company owns, operates and invests in local media assets. The Company’s segments include Eastern US Publishing, Central US Publishing, Western US Publishing and BridgeTower. It focuses on owning and acquiring local media assets in small to mid-size markets. It is a publisher of local newspapers and related publications. As of December 25, 2016, its portfolio of media assets spanned across 538 markets and 36 states. As of December 25, 2016, its products included 631 community print publications, 538 Websites and two yellow page directories. Its directory portfolio includes Surewest Directories located in and around the Sacramento, California area, primarily in Roseville, California. The Roseville directory serves the local Roseville community. It also owns additional directory based in Mt. Shasta, California. Propel is its business services product line with digital products designed for small and midsized businesses (SMBs).

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