PEARSON PLC (PES.DE) Stock Fundamental Analysis
FRA:PES - Deutsche Boerse Ag - GB0006776081 - Common Stock - Currency: EUR
Taking everything into account, PES scores 6 out of 10 in our fundamental rating. PES was compared to 4 industry peers in the Diversified Consumer Services industry. PES scores excellent on profitability, but there are some minor concerns on its financial health. PES is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
PES had positive earnings in the past year.
PES had a positive operating cash flow in the past year.
In the past 5 years PES has always been profitable.
In the past 5 years PES always reported a positive cash flow from operatings.
1.2 Ratios
PES has a better Return On Assets (6.30%) than 100.00% of its industry peers.
The Return On Equity of PES (10.75%) is better than 100.00% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.19%, PES is in the better half of the industry, outperforming 75.00% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for PES is in line with the industry average of 8.54%.
The last Return On Invested Capital (8.19%) for PES is above the 3 year average (6.70%), which is a sign of increasing profitability.
| 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
Looking at the Profit Margin, with a value of 12.22%, PES belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
In the last couple of years the Profit Margin of PES has grown nicely.
PES has a better Operating Margin (15.37%) than 100.00% of its industry peers.
In the last couple of years the Operating Margin of PES has grown nicely.
PES has a better Gross Margin (50.99%) than 75.00% 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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so PES is destroying value.
Compared to 1 year ago, PES has less shares outstanding
PES has less shares outstanding than it did 5 years ago.
The debt/assets ratio for PES is higher compared to a year ago.
2.2 Solvency
PES has an Altman-Z score of 2.71. This is not the best score and indicates that PES is in the grey zone with still only limited risk for bankruptcy at the moment.
PES's Altman-Z score of 2.71 is fine compared to the rest of the industry. PES outperforms 75.00% of its industry peers.
PES has a debt to FCF ratio of 2.93. This is a good value and a sign of high solvency as PES would need 2.93 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 2.93, PES is doing good in the industry, outperforming 75.00% of the companies in the same industry.
PES has a Debt/Equity ratio of 0.29. This is a healthy value indicating a solid balance between debt and equity.
With a decent Debt to Equity ratio value of 0.29, PES is doing good in the industry, outperforming 75.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.29 | ||
| Debt/FCF | 2.93 | ||
| Altman-Z | 2.71 |
ROIC/WACC0.97
WACC8.44%
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 Current ratio of 1.85. This is in the better half of the industry: PES outperforms 75.00% of its industry peers.
PES has a Quick Ratio of 1.80. 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 Quick ratio of 1.80. This is in the better half of the industry: PES outperforms 75.00% 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%.
Measured over the past 5 years, PES shows a small growth in Earnings Per Share. The EPS has been growing by 1.15% on average per year.
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 2.81% on average over the next years.
EPS Next Y9.54%
EPS Next 2Y9.77%
EPS Next 3Y9.68%
EPS Next 5YN/A
Revenue Next Year0.25%
Revenue Next 2Y1.97%
Revenue Next 3Y2.81%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
PES is valuated rather expensively with a Price/Earnings ratio of 17.77.
PES's Price/Earnings ratio is rather cheap when compared to the industry. PES is cheaper than 100.00% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.48. PES is valued slightly cheaper when compared to this.
A Price/Forward Earnings ratio of 16.12 indicates a correct valuation of PES.
Compared to the rest of the industry, the Price/Forward Earnings ratio of PES indicates a rather cheap valuation: PES is cheaper than 100.00% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of PES to the average of the S&P500 Index (34.04), we can say PES is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.77 | ||
| Fwd PE | 16.12 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PES is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, PES is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.92 | ||
| EV/EBITDA | 10.54 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
PES has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.86
PEG (5Y)15.43
EPS Next 2Y9.77%
EPS Next 3Y9.68%
5. Dividend
5.1 Amount
PES has a Yearly Dividend Yield of 2.25%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.86, PES pays a bit more dividend than its industry peers.
PES's Dividend Yield is comparable with the S&P500 average which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.25% |
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
35.94% of the earnings are spent on dividend by PES. This is a low number and 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 (8/8/2025, 7:00:00 PM)
12.44
-0.53 (-4.05%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners76.58%
Inst Owner ChangeN/A
Ins Owners0.19%
Ins Owner ChangeN/A
Market Cap8.07B
Analysts68.57
Price Target14.57 (17.12%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.25% |
Yearly Dividend0.26
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)-2.56%
PT rev (3m)-2.94%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)0%
EPS NY rev (3m)0%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)-0.87%
Revenue NY rev (3m)-2.43%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.77 | ||
| Fwd PE | 16.12 | ||
| P/S | 1.97 | ||
| P/FCF | 13.92 | ||
| P/OCF | 11.17 | ||
| P/B | 1.73 | ||
| P/tB | 6.92 | ||
| EV/EBITDA | 10.54 |
EPS(TTM)0.7
EY5.63%
EPS(NY)0.77
Fwd EY6.2%
FCF(TTM)0.89
FCFY7.18%
OCF(TTM)1.11
OCFY8.95%
SpS6.31
BVpS7.17
TBVpS1.8
PEG (NY)1.86
PEG (5Y)15.43
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 | 2.71 |
F-Score7
WACC8.44%
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 Year0.25%
Revenue Next 2Y1.97%
Revenue Next 3Y2.81%
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%