Head-To-Head Analysis: Scholastic (SCHL) versus Pearson (PSO)

Scholastic (NASDAQ: SCHL) and Pearson (NYSE:PSO) are both consumer staples companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, valuation, risk, institutional ownership, profitability and dividends.

Risk and Volatility

Scholastic has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500. Comparatively, Pearson has a beta of 0.25, suggesting that its stock price is 75% less volatile than the S&P 500.

Profitability

This table compares Scholastic and Pearson’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Scholastic -1.00% 3.58% 2.52%
Pearson N/A N/A N/A

Insider & Institutional Ownership

83.9% of Scholastic shares are held by institutional investors. Comparatively, 1.3% of Pearson shares are held by institutional investors. 22.3% of Scholastic shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Scholastic and Pearson’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Scholastic $1.74 billion 0.83 $52.30 million $1.83 22.74
Pearson $5.81 billion 1.48 $523.25 million $0.70 15.71

Pearson has higher revenue and earnings than Scholastic. Pearson is trading at a lower price-to-earnings ratio than Scholastic, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations for Scholastic and Pearson, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Scholastic 0 1 1 0 2.50
Pearson 1 1 2 0 2.25

Scholastic currently has a consensus price target of $41.00, suggesting a potential downside of 1.47%. Given Scholastic’s stronger consensus rating and higher possible upside, equities analysts plainly believe Scholastic is more favorable than Pearson.

Dividends

Scholastic pays an annual dividend of $0.60 per share and has a dividend yield of 1.4%. Pearson pays an annual dividend of $0.33 per share and has a dividend yield of 3.0%. Scholastic pays out 32.8% of its earnings in the form of a dividend. Pearson pays out 47.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Scholastic beats Pearson on 10 of the 16 factors compared between the two stocks.

Scholastic Company Profile

Scholastic Corporation, together with its subsidiaries, publishes and distributes children's books worldwide. It operates through three segments: Children's Book Publishing and Distribution, Education, and International. The Children's Book Publishing and Distribution segment engages in the publication and distribution of children's books, e-books, media, and interactive products through its school book clubs and book fairs, and trade channel. Its original publications include Harry Potter, The Hunger Games, The 39 Clues, Spirit Animals, The Magic School Bus, I Spy, Captain Underpants, Goosebumps, and Clifford The Big Red Dog; and licensed properties consist of Star Wars, Lego, Pokemon, and Geronimo Stilton. In addition, this segment publishes and creates ?books plus' products for children, including titles, such as Make Clay Charms, Sew Cute Mini Treats, Make Your Own Mini Erasers, and Lego Chain Reactions. The Education segment is involved in the publication and distribution of children's books, print and on-line references, and non-fiction and fiction focused products, classroom magazines and materials, as well as custom curriculum and teaching guides. It publishes non-fiction books under the imprints of Children's Press and Franklin Watts; and consumer magazines under the Teacher magazine name. The International segment licenses the rights to selected Scholastic titles in 47 languages to other publishing companies; and sells educational materials, digital educational resources, and children's books to schools, libraries, bookstores, and other book distributors in approximately 145 countries. The company distributes its products and services directly to schools and libraries through retail stores and the Internet. Scholastic Corporation was founded in 1920 and is headquartered in New York, New York.

Pearson Company Profile

Pearson plc provides educational materials and learning technologies for teachers and students worldwide. It operates through North America, Growth, and Core segments. The company offers courseware services, including curriculum materials provided in book form and/or via access to digital content; and assessments, such as test development, processing, and scoring services. It also operates schools, colleges, and universities; and English language teaching centers, as well as provides online learning services in partnership with universities and other academic institutions. In addition, the company sells books; delivers and installs off -the-shelf software; and provides services to academic institutions, such as programme development, student acquisition, education technology, and student support services, as well as undertakes contracts to process qualifying tests for individual professions and government departments under multi-year contractual arrangements. It provides its services to governments, educational institutions, corporations, and professional bodies. Pearson plc was founded in 1844 and is headquartered in London, the United Kingdom.

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