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PSO vs. RSVR: Which Stock Should Value Investors Buy Now?

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Investors interested in Media Conglomerates stocks are likely familiar with Pearson (PSO - Free Report) and Reservoir Media, Inc. (RSVR - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Pearson and Reservoir Media, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. 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. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

PSO currently has a forward P/E ratio of 16.84, while RSVR has a forward P/E of 46.32. We also note that PSO has a PEG ratio of 1.69. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RSVR currently has a PEG ratio of 3.09.

Another notable valuation metric for PSO is its P/B ratio of 1.14. 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, RSVR has a P/B of 1.34.

Based on these metrics and many more, PSO holds a Value grade of B, while RSVR has a Value grade of D.

PSO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PSO is likely the superior value option right now.


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