Reviewing Pearson (NYSE:PSO) & Nexstar Media Group (NASDAQ:NXST)

Nexstar Media Group (NASDAQ:NXST) and Pearson (NYSE:PSO) are both mid-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Nexstar Media Group	12.21%	29.21%	5.64%
Pearson	N/A	N/A	N/A

Valuation and Earnings

This table compares Nexstar Media Group and Pearson”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nexstar Media Group	$5.41 billion	0.97	$722.00 million	$19.74	8.74
Pearson	$4.54 billion	2.17	$554.61 million	$0.94	15.80

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

Insider and Institutional Ownership

95.3% of Nexstar Media Group shares are held by institutional investors. Comparatively, 2.1% of Pearson shares are held by institutional investors. 6.7% of Nexstar Media Group shares are held by insiders. Comparatively, 0.1% of Pearson shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Nexstar Media Group has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500. Comparatively, Pearson has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Nexstar Media Group and Pearson, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nexstar Media Group	0	0	7	0	3.00
Pearson	0	0	1	1	3.50

Nexstar Media Group presently has a consensus price target of $205.71, indicating a potential upside of 19.27%. Pearson has a consensus price target of $18.00, indicating a potential upside of 21.17%. Given Pearson’s stronger consensus rating and higher possible upside, analysts plainly believe Pearson is more favorable than Nexstar Media Group.

Dividends

Nexstar Media Group pays an annual dividend of $7.44 per share and has a dividend yield of 4.3%. Pearson pays an annual dividend of $0.44 per share and has a dividend yield of 3.0%. Nexstar Media Group pays out 37.7% of its earnings in the form of a dividend. Pearson pays out 46.8% 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. Nexstar Media Group has raised its dividend for 12 consecutive years. Nexstar Media Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Nexstar Media Group beats Pearson on 13 of the 18 factors compared between the two stocks.

About Nexstar Media Group

Nexstar Media Group, Inc. operates as a diversified media company that produces and distributes engaging local and national news, sports and entertainment content across the television and digital platforms in the United States. It owns, operates, programs, or provides sales and other services to various markets; and offers television programming services. The company offers video and display advertising platforms that are delivered locally or nationally through its own and various third party websites, mobile and over-the-top applications, other digital media solutions to media publishers, and advertisers and a consumer product reviews platform. In addition, it owns NewsNation, a national cable news network; and WGN-AM, a Chicago radio station, as well as owns and operates digital multicast networks and other multicast network services. Further, its digital assets include local websites, mobile applications, connected television applications, free-ad supported television channels representing products of local television stations, The CW, The Hill and BestReviews, and a suite of advertising solutions. Additionally, the company engages in digital business; and management of real estate assets, including leasing of owned office and production facilities. Its stations are affiliates of ABC, NBC, FOX, CBS, The CW, MyNetworkTV, and other broadcast television networks. The company was formerly known as Nexstar Broadcasting Group, Inc. and changed its name to Nexstar Media Group, Inc. in January 2017. Nexstar Media Group, Inc. was founded in 1996 and is headquartered in Irving, Texas.

About Pearson

Pearson plc offers educational courseware, assessments, and services in the United Kingdom, the United States, Canada, the Asia Pacific, other European countries, and internationally. The company operates through five segments: Assessment & Qualifications, Virtual Learning, English Language Learning, Workforce Skills, and Higher Education. The Assessment & Qualifications segment offers Pearson VUE, US student assessment, clinical assessment, UK GCSE, and A levels and international academic qualifications and associated courseware. The Virtual Learning segment provides virtual schools and online program management services. The English Language Learning segment offers Pearson test of English, institutional courseware, and English online solutions. The Workforce Skills offers BTEC, GED, TalentLens, Faethm, Credly, Pearson college, and apprenticeships. The Higher Education segment engages in the US, Canadian, and international higher education courseware businesses. The company was founded in 1844 and is headquartered in London, the United Kingdom.