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PSO or RSVR: Which Is the Better Value Stock Right 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 is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PSO has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

PSO currently has a forward P/E ratio of 19.20, while RSVR has a forward P/E of 50.69. We also note that PSO has a PEG ratio of 1.56. 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. RSVR currently has a PEG ratio of 3.38.

Another notable valuation metric for PSO is its P/B ratio of 1.30. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RSVR has a P/B of 1.66.

These metrics, and several others, help PSO earn a Value grade of B, while RSVR has been given a Value grade of D.

PSO sticks out from RSVR in both our Zacks Rank and Style Scores models, so value investors will likely feel that PSO is the better option right now.


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