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

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

Volatility and Risk

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

Insider & Institutional Ownership

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

Valuation and Earnings

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

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

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

Dividends

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Tencent Music Entertainment Group	33.44%	11.00%	8.79%
Pearson	N/A	N/A	N/A

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Tencent Music Entertainment Group and Pearson, as provided by MarketBeat.

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

Tencent Music Entertainment Group presently has a consensus target price of $22.03, suggesting a potential upside of 117.96%. Given Tencent Music Entertainment Group’s higher probable upside, equities 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 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.

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.