Reviewing Pearson (NYSE:PSO) and Tencent Music Entertainment Group (NYSE:TME)

Pearson (NYSE:PSO) and Tencent Music Entertainment Group (NYSE:TME) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Volatility and Risk

Pearson has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500. Comparatively, Tencent Music Entertainment Group has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500.

Institutional & Insider Ownership

2.1% of Pearson shares are owned by institutional investors. Comparatively, 24.3% of Tencent Music Entertainment Group shares are owned by institutional investors. 0.1% of Pearson shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Pearson and Tencent Music Entertainment Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pearson	$4.72 billion	1.96	$441.77 million	N/A	N/A
Tencent Music Entertainment Group	$4.71 billion	3.33	$1.58 billion	$0.99	10.21

Tencent Music Entertainment Group has lower revenue, but higher earnings than Pearson.

Dividends

Pearson pays an annual dividend of $0.47 per share and has a dividend yield of 3.2%. Tencent Music Entertainment Group pays an annual dividend of $0.23 per share and has a dividend yield of 2.3%. Tencent Music Entertainment Group pays out 23.2% of its earnings in the form of a dividend.

Profitability

This table compares Pearson and Tencent Music Entertainment Group’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
Tencent Music Entertainment Group	33.44%	11.00%	8.79%

Analyst Ratings

This is a summary of current ratings and price targets for Pearson and Tencent Music Entertainment Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pearson	0	4	1	1	2.50
Tencent Music Entertainment Group	0	8	6	0	2.43

Tencent Music Entertainment Group has a consensus price target of $22.03, indicating a potential upside of 117.96%. Given Tencent Music Entertainment Group’s higher probable upside, analysts clearly believe Tencent Music Entertainment Group is more favorable than Pearson.

Summary

Tencent Music Entertainment Group beats Pearson on 9 of the 15 factors compared between the two stocks.

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.

About Tencent Music Entertainment Group

Tencent Music Entertainment Group operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People's Republic of China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover music in personalized ways; long-form audio content, including audiobooks, podcasts and talk shows, as well as music-oriented video content comprising music videos, live performances, and short videos; and WeSing, which enables users to sing along from its library of karaoke songs and share their performances in audio or video formats with friends. The company also delivers music-centric live streaming services primarily through the Live Streaming tab on QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with a diverse audience base; and Lazy Audio, an audio platform. In addition, it sells music-related merchandise; and artist-related merchandise, such as branded apparel, posters and art prints, and accessories and integrated and technology-driven music solutions that help IoT device manufacturers build and operate their branded music services on their IoT devices, as well as offers advertising services across its online karaoke platform and online music apps. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.