Pearson (NYSE:PSO) and V.F. (NYSE:VFC) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, earnings, institutional ownership, analyst recommendations, risk and dividends.
Dividends
Pearson pays an annual dividend of $0.38 per share and has a dividend yield of 3.3%. V.F. pays an annual dividend of $1.96 per share and has a dividend yield of 2.3%. Pearson pays out 51.4% of its earnings in the form of a dividend. V.F. pays out 73.1% 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. Pearson has raised its dividend for 1 consecutive years and V.F. has raised its dividend for 49 consecutive years. Pearson is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares Pearson and V.F.'s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Pearson | N/A | N/A | N/A |
| V.F. | -0.52% | 16.44% | 4.78% |
Analyst Recommendations
This is a breakdown of current ratings and target prices for Pearson and V.F., as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Pearson | 6 | 5 | 3 | 0 | 1.79 |
| V.F. | 1 | 3 | 15 | 0 | 2.74 |
V.F. has a consensus target price of $88.6471, indicating a potential upside of 4.61%. Given V.F.'s stronger consensus rating and higher probable upside, analysts plainly believe V.F. is more favorable than Pearson.
Institutional and Insider Ownership
87.7% of V.F. shares are owned by institutional investors. 0.8% of V.F. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Pearson and V.F.'s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Pearson | $4.94 billion | 1.73 | $337.10 million | $0.74 | 15.34 |
| V.F. | $10.49 billion | 3.17 | $679.45 million | $2.68 | 31.62 |
V.F. has higher revenue and earnings than Pearson. Pearson is trading at a lower price-to-earnings ratio than V.F., indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Pearson has a beta of 0.37, suggesting that its share price is 63% less volatile than the S&P 500. Comparatively, V.F. has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500.
Summary
V.F. beats Pearson on 13 of the 17 factors compared between the two stocks.
