Analyzing Pearson (NYSE:PSO) and Alliance Entertainment (NASDAQ:AENT)

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

Institutional and Insider Ownership

0.3% of Alliance Entertainment shares are owned by institutional investors. Comparatively, 2.1% of Pearson shares are owned by institutional investors. 77.6% of Alliance Entertainment shares are owned by company insiders. Comparatively, 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 will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Alliance Entertainment and Pearson, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alliance Entertainment	0	2	2	0	2.50
Pearson	0	4	2	1	2.57

Alliance Entertainment presently has a consensus price target of $10.67, indicating a potential upside of 38.35%. Pearson has a consensus price target of $18.00, indicating a potential upside of 36.21%. Given Alliance Entertainment’s higher probable upside, research analysts clearly believe Alliance Entertainment is more favorable than Pearson.

Valuation and Earnings

This table compares Alliance Entertainment 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
Alliance Entertainment	$1.06 billion	0.37	$15.08 million	$0.39	19.77
Pearson	$4.54 billion	1.85	$554.61 million	N/A	N/A

Pearson has higher revenue and earnings than Alliance Entertainment.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Alliance Entertainment	1.80%	21.87%	5.91%
Pearson	N/A	N/A	N/A

Volatility & Risk

Alliance Entertainment has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500. Comparatively, Pearson has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500.

About Alliance Entertainment

Alliance Entertainment Holding Corporation operates as a wholesaler, distributor, and e-commerce provider for the entertainment industry worldwide. It offers vinyl records, video games, digital video discs, blu-rays, toys, compact discs, collectibles, and other entertainment and consumer products. The company also provides third party logistics products and services. It distributes its physical media, entertainment products, hardware, and accessories through multi-channel strategy. The company was founded in 1990 and is headquartered in Plantation, Florida.

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.