PEARSON PLC (PES.DE) Stock Fundamental Analysis
FRA:PES - Deutsche Boerse Ag - GB0006776081 - Common Stock - Currency: EUR
We assign a fundamental rating of 6 out of 10 to PES. PES was compared to 6 industry peers in the Diversified Consumer Services industry. While PES belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. PES has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
In the past year PES was profitable.
In the past year PES had a positive cash flow from operations.
Each year in the past 5 years PES has been profitable.
PES had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
PES has a Return On Assets of 6.30%. This is amongst the best in the industry. PES outperforms 100.00% of its industry peers.
The Return On Equity of PES (10.75%) is better than 100.00% of its industry peers.
With an excellent Return On Invested Capital value of 8.19%, PES belongs to the best of the industry, outperforming 83.33% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for PES is in line with the industry average of 7.67%.
The 3 year average ROIC (6.70%) for PES is below the current ROIC(8.19%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.3% | ||
| ROE | 10.75% | ||
| ROIC | 8.19% |
ROA(3y)5.07%
ROA(5y)4.41%
ROE(3y)8.59%
ROE(5y)7.58%
ROIC(3y)6.7%
ROIC(5y)5.84%
1.3 Margins
PES's Profit Margin of 12.22% is amongst the best of the industry. PES outperforms 100.00% of its industry peers.
PES's Profit Margin has improved in the last couple of years.
PES has a Operating Margin of 15.37%. This is amongst the best in the industry. PES outperforms 100.00% of its industry peers.
PES's Operating Margin has improved in the last couple of years.
PES has a better Gross Margin (50.99%) than 83.33% of its industry peers.
PES's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.37% | ||
| PM (TTM) | 12.22% | ||
| GM | 50.99% |
OM growth 3Y25.2%
OM growth 5Y6.89%
PM growth 3Y33.26%
PM growth 5Y12.36%
GM growth 3Y1.31%
GM growth 5Y-0.38%
2. Health
2.1 Basic Checks
PES has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, PES has less shares outstanding
Compared to 5 years ago, PES has less shares outstanding
PES has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 2.72 indicates that PES is not a great score, but indicates only limited risk for bankruptcy at the moment.
With a decent Altman-Z score value of 2.72, PES is doing good in the industry, outperforming 66.67% of the companies in the same industry.
The Debt to FCF ratio of PES is 2.93, which is a good value as it means it would take PES, 2.93 years of fcf income to pay off all of its debts.
PES has a better Debt to FCF ratio (2.93) than 83.33% of its industry peers.
PES has a Debt/Equity ratio of 0.29. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.29, PES is in the better half of the industry, outperforming 66.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.29 | ||
| Debt/FCF | 2.93 | ||
| Altman-Z | 2.72 |
ROIC/WACC0.97
WACC8.43%
2.3 Liquidity
PES has a Current Ratio of 1.85. This is a normal value and indicates that PES is financially healthy and should not expect problems in meeting its short term obligations.
PES has a better Current ratio (1.85) than 66.67% of its industry peers.
A Quick Ratio of 1.80 indicates that PES should not have too much problems paying its short term obligations.
PES has a Quick ratio of 1.80. This is in the better half of the industry: PES outperforms 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.85 | ||
| Quick Ratio | 1.8 |
3. Growth
3.1 Past
PES shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 5.89%.
PES shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 1.15% yearly.
Looking at the last year, PES shows a decrease in Revenue. The Revenue has decreased by -3.32% in the last year.
Measured over the past years, PES shows a decrease in Revenue. The Revenue has been decreasing by -1.70% on average per year.
EPS 1Y (TTM)5.89%
EPS 3Y20.87%
EPS 5Y1.15%
EPS Q2Q%10.25%
Revenue 1Y (TTM)-3.32%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%0.17%
3.2 Future
Based on estimates for the next years, PES will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.68% on average per year.
The Revenue is expected to grow by 3.20% on average over the next years.
EPS Next Y9.54%
EPS Next 2Y9.77%
EPS Next 3Y9.68%
EPS Next 5YN/A
Revenue Next Year1.13%
Revenue Next 2Y2.52%
Revenue Next 3Y3.2%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 18.00 indicates a rather expensive valuation of PES.
Compared to the rest of the industry, the Price/Earnings ratio of PES indicates a rather cheap valuation: PES is cheaper than 100.00% of the companies listed in the same industry.
PES is valuated rather cheaply when we compare the Price/Earnings ratio to 26.52, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 16.53, which indicates a correct valuation of PES.
PES's Price/Forward Earnings ratio is rather cheap when compared to the industry. PES is cheaper than 100.00% of the companies in the same industry.
PES is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.25, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18 | ||
| Fwd PE | 16.53 |
4.2 Price Multiples
83.33% of the companies in the same industry are more expensive than PES, based on the Enterprise Value to EBITDA ratio.
PES's Price/Free Cash Flow ratio is rather cheap when compared to the industry. PES is cheaper than 83.33% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.5 | ||
| EV/EBITDA | 10.63 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of PES may justify a higher PE ratio.
PEG (NY)1.89
PEG (5Y)15.63
EPS Next 2Y9.77%
EPS Next 3Y9.68%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.04%, PES has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.98, PES pays a better dividend. On top of this PES pays more dividend than 83.33% of the companies listed in the same industry.
PES's Dividend Yield is comparable with the S&P500 average which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.04% |
5.2 History
The dividend of PES has a limited annual growth rate of 4.00%.
Dividend Growth(5Y)4%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
PES pays out 35.94% of its income as dividend. This is a sustainable payout ratio.
The dividend of PES is growing, but earnings are growing more, so the dividend growth is sustainable.
DP35.94%
EPS Next 2Y9.77%
EPS Next 3Y9.68%
FRA:PES (6/6/2025, 7:00:00 PM)
13.14
-1.02 (-7.24%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners83.16%
Inst Owner ChangeN/A
Ins Owners0.26%
Ins Owner ChangeN/A
Market Cap8.67B
Analysts68
Price Target15.89 (20.93%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.04% |
Yearly Dividend0.27
Dividend Growth(5Y)4%
DP35.94%
Div Incr Years4
Div Non Decr Years4
Ex-DateN/A
Surprises & Revisions
EPS beat(2)N/A
Avg EPS beat(2)N/A
Min EPS beat(2)N/A
Max EPS beat(2)N/A
EPS beat(4)N/A
Avg EPS beat(4)N/A
Min EPS beat(4)N/A
Max EPS beat(4)N/A
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)N/A
Avg Revenue beat(2)N/A
Min Revenue beat(2)N/A
Max Revenue beat(2)N/A
Revenue beat(4)N/A
Avg Revenue beat(4)N/A
Min Revenue beat(4)N/A
Max Revenue beat(4)N/A
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)0%
PT rev (3m)2.92%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)0%
EPS NY rev (3m)-3.67%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)-1.58%
Revenue NY rev (3m)-4.66%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18 | ||
| Fwd PE | 16.53 | ||
| P/S | 2.05 | ||
| P/FCF | 14.5 | ||
| P/OCF | 11.64 | ||
| P/B | 1.81 | ||
| P/tB | 7.21 | ||
| EV/EBITDA | 10.63 |
EPS(TTM)0.73
EY5.56%
EPS(NY)0.79
Fwd EY6.05%
FCF(TTM)0.91
FCFY6.89%
OCF(TTM)1.13
OCFY8.59%
SpS6.4
BVpS7.27
TBVpS1.82
PEG (NY)1.89
PEG (5Y)15.63
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.3% | ||
| ROE | 10.75% | ||
| ROCE | 10.09% | ||
| ROIC | 8.19% | ||
| ROICexc | 9.1% | ||
| ROICexgc | 24.03% | ||
| OM | 15.37% | ||
| PM (TTM) | 12.22% | ||
| GM | 50.99% | ||
| FCFM | 14.16% |
ROA(3y)5.07%
ROA(5y)4.41%
ROE(3y)8.59%
ROE(5y)7.58%
ROIC(3y)6.7%
ROIC(5y)5.84%
ROICexc(3y)7.48%
ROICexc(5y)7.31%
ROICexgc(3y)20.27%
ROICexgc(5y)22.68%
ROCE(3y)8.26%
ROCE(5y)7.2%
ROICexcg growth 3Y7.27%
ROICexcg growth 5Y10.63%
ROICexc growth 3Y17.53%
ROICexc growth 5Y6.81%
OM growth 3Y25.2%
OM growth 5Y6.89%
PM growth 3Y33.26%
PM growth 5Y12.36%
GM growth 3Y1.31%
GM growth 5Y-0.38%
F-Score7
Asset Turnover0.52
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.29 | ||
| Debt/FCF | 2.93 | ||
| Debt/EBITDA | 1.48 | ||
| Cap/Depr | 52.77% | ||
| Cap/Sales | 3.49% | ||
| Interest Coverage | 8.4 | ||
| Cash Conversion | 80.28% | ||
| Profit Quality | 115.9% | ||
| Current Ratio | 1.85 | ||
| Quick Ratio | 1.8 | ||
| Altman-Z | 2.72 |
F-Score7
WACC8.43%
ROIC/WACC0.97
Cap/Depr(3y)49.36%
Cap/Depr(5y)46.7%
Cap/Sales(3y)3.58%
Cap/Sales(5y)3.97%
Profit Quality(3y)103.3%
Profit Quality(5y)94.38%
High Growth Momentum
Growth
EPS 1Y (TTM)5.89%
EPS 3Y20.87%
EPS 5Y1.15%
EPS Q2Q%10.25%
EPS Next Y9.54%
EPS Next 2Y9.77%
EPS Next 3Y9.68%
EPS Next 5YN/A
Revenue 1Y (TTM)-3.32%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%0.17%
Revenue Next Year1.13%
Revenue Next 2Y2.52%
Revenue Next 3Y3.2%
Revenue Next 5YN/A
EBIT growth 1Y6.43%
EBIT growth 3Y26.69%
EBIT growth 5Y5.08%
EBIT Next Year38.58%
EBIT Next 3Y15.6%
EBIT Next 5YN/A
FCF growth 1Y26.07%
FCF growth 3Y49.68%
FCF growth 5Y23.37%
OCF growth 1Y19.43%
OCF growth 3Y24.36%
OCF growth 5Y11.19%