PEARSON PLC-SPONSORED ADR (PSO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:PSO - US7050151056 - ADR
14.24 USD
+0.02 (+0.14%)
14.24 USD
0 (0%)
Taking everything into account, PSO scores 6 out of 10 in our fundamental rating. PSO was compared to 76 industry peers in the Diversified Consumer Services industry. Both the health and profitability get an excellent rating, making PSO a very profitable company, without any liquidiy or solvency issues. PSO has a valuation in line with the averages, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year PSO was profitable.
In the past year PSO had a positive cash flow from operations.
Each year in the past 5 years PSO has been profitable.
In the past 5 years PSO always reported a positive cash flow from operatings.
1.2 Ratios
PSO has a better Return On Assets (7.08%) than 71.05% of its industry peers.
With a decent Return On Equity value of 12.29%, PSO is doing good in the industry, outperforming 65.79% of the companies in the same industry.
With a decent Return On Invested Capital value of 8.65%, PSO is doing good in the industry, outperforming 76.32% of the companies in the same industry.
PSO had an Average Return On Invested Capital over the past 3 years of 6.70%. This is below the industry average of 10.55%.
The last Return On Invested Capital (8.65%) for PSO is above the 3 year average (6.70%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.08% | ||
| ROE | 12.29% | ||
| ROIC | 8.65% |
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
PSO has a better Profit Margin (12.53%) than 76.32% of its industry peers.
PSO's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 15.77%, PSO is in the better half of the industry, outperforming 77.63% of the companies in the same industry.
In the last couple of years the Operating Margin of PSO has grown nicely.
The Gross Margin of PSO (51.45%) is comparable to the rest of the industry.
In the last couple of years the Gross Margin of PSO has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.77% | ||
| PM (TTM) | 12.53% | ||
| GM | 51.45% |
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
PSO has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for PSO has been reduced compared to 1 year ago.
PSO has less shares outstanding than it did 5 years ago.
The debt/assets ratio for PSO is higher compared to a year ago.
2.2 Solvency
PSO has an Altman-Z score of 2.81. This is not the best score and indicates that PSO is in the grey zone with still only limited risk for bankruptcy at the moment.
PSO has a better Altman-Z score (2.81) than 71.05% of its industry peers.
The Debt to FCF ratio of PSO is 2.42, which is a good value as it means it would take PSO, 2.42 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of PSO (2.42) is better than 77.63% of its industry peers.
PSO has a Debt/Equity ratio of 0.40. This is a healthy value indicating a solid balance between debt and equity.
PSO has a Debt to Equity ratio of 0.40. This is comparable to the rest of the industry: PSO outperforms 47.37% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 2.42 | ||
| Altman-Z | 2.81 |
ROIC/WACC0.98
WACC8.83%
2.3 Liquidity
A Current Ratio of 2.31 indicates that PSO has no problem at all paying its short term obligations.
PSO has a Current ratio of 2.31. This is amongst the best in the industry. PSO outperforms 80.26% of its industry peers.
A Quick Ratio of 2.24 indicates that PSO has no problem at all paying its short term obligations.
The Quick ratio of PSO (2.24) is better than 80.26% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.31 | ||
| Quick Ratio | 2.24 |
3. Growth
3.1 Past
PSO shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.29%.
Measured over the past 5 years, PSO shows a small growth in Earnings Per Share. The EPS has been growing by 1.15% on average per year.
PSO shows a decrease in Revenue. In the last year, the revenue decreased by -0.82%.
PSO shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -1.70% yearly.
EPS 1Y (TTM)3.29%
EPS 3Y20.87%
EPS 5Y1.15%
EPS Q2Q%-5.47%
Revenue 1Y (TTM)-0.82%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%-1.82%
3.2 Future
Based on estimates for the next years, PSO will show a small growth in Earnings Per Share. The EPS will grow by 7.68% on average per year.
Based on estimates for the next years, PSO will show a small growth in Revenue. The Revenue will grow by 3.16% on average per year.
EPS Next Y2.77%
EPS Next 2Y7.05%
EPS Next 3Y8.32%
EPS Next 5Y7.68%
Revenue Next Year-0.14%
Revenue Next 2Y2.5%
Revenue Next 3Y3.12%
Revenue Next 5Y3.16%
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
With a Price/Earnings ratio of 16.75, PSO is valued correctly.
Based on the Price/Earnings ratio, PSO is valued a bit cheaper than 71.05% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.19, PSO is valued a bit cheaper.
The Price/Forward Earnings ratio is 14.36, which indicates a correct valuation of PSO.
PSO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. PSO is cheaper than 77.63% of the companies in the same industry.
PSO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 23.88.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.75 | ||
| Fwd PE | 14.36 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PSO is valued a bit cheaper than the industry average as 68.42% of the companies are valued more expensively.
PSO's Price/Free Cash Flow ratio is rather cheap when compared to the industry. PSO is cheaper than 86.84% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.95 | ||
| EV/EBITDA | 10.17 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates PSO does not grow enough to justify the current Price/Earnings ratio.
The decent profitability rating of PSO may justify a higher PE ratio.
PEG (NY)6.04
PEG (5Y)14.55
EPS Next 2Y7.05%
EPS Next 3Y8.32%
5. Dividend
5.1 Amount
PSO has a Yearly Dividend Yield of 2.32%.
PSO's Dividend Yield is rather good when compared to the industry average which is at 0.32. PSO pays more dividend than 94.74% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 1.94, PSO has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
5.2 History
The dividend of PSO has a limited annual growth rate of 4.00%.
PSO has been paying a dividend for at least 10 years, so it has a reliable track record.
PSO has decreased its dividend in the last 3 years.
Dividend Growth(5Y)4%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
PSO pays out 36.05% of its income as dividend. This is a sustainable payout ratio.
PSO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP36.05%
EPS Next 2Y7.05%
EPS Next 3Y8.32%
14.24
+0.02 (+0.14%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners79.26%
Inst Owner Change0%
Ins Owners0.2%
Ins Owner ChangeN/A
Market Cap9.06B
Revenue(TTM)3.52B
Net Income(TTM)441.00M
Analysts68.57
Price Target16.73 (17.49%)
Short Float %0.4%
Short Ratio3.5
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
Yearly Dividend0.32
Dividend Growth(5Y)4%
DP36.05%
Div Incr Years2
Div Non Decr Years2
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)-0.03%
PT rev (3m)-0.96%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-0.08%
EPS NY rev (3m)-0.03%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0.03%
Revenue NY rev (3m)0.06%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.75 | ||
| Fwd PE | 14.36 | ||
| P/S | 1.92 | ||
| P/FCF | 10.95 | ||
| P/OCF | 9.06 | ||
| P/B | 1.88 | ||
| P/tB | 8.64 | ||
| EV/EBITDA | 10.17 |
EPS(TTM)0.85
EY5.97%
EPS(NY)0.99
Fwd EY6.96%
FCF(TTM)1.3
FCFY9.14%
OCF(TTM)1.57
OCFY11.03%
SpS7.43
BVpS7.58
TBVpS1.65
PEG (NY)6.04
PEG (5Y)14.55
Graham Number12.04
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.08% | ||
| ROE | 12.29% | ||
| ROCE | 10.65% | ||
| ROIC | 8.65% | ||
| ROICexc | 9.26% | ||
| ROICexgc | 21.92% | ||
| OM | 15.77% | ||
| PM (TTM) | 12.53% | ||
| GM | 51.45% | ||
| FCFM | 17.5% |
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%
ROICexgc growth 3Y7.27%
ROICexgc 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-Score8
Asset Turnover0.57
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 2.42 | ||
| Debt/EBITDA | 1.84 | ||
| Cap/Depr | 58.45% | ||
| Cap/Sales | 3.64% | ||
| Interest Coverage | 10.09 | ||
| Cash Conversion | 96.12% | ||
| Profit Quality | 139.68% | ||
| Current Ratio | 2.31 | ||
| Quick Ratio | 2.24 | ||
| Altman-Z | 2.81 |
F-Score8
WACC8.83%
ROIC/WACC0.98
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)3.29%
EPS 3Y20.87%
EPS 5Y1.15%
EPS Q2Q%-5.47%
EPS Next Y2.77%
EPS Next 2Y7.05%
EPS Next 3Y8.32%
EPS Next 5Y7.68%
Revenue 1Y (TTM)-0.82%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%-1.82%
Revenue Next Year-0.14%
Revenue Next 2Y2.5%
Revenue Next 3Y3.12%
Revenue Next 5Y3.16%
EBIT growth 1Y9.47%
EBIT growth 3Y26.69%
EBIT growth 5Y5.08%
EBIT Next Year39.42%
EBIT Next 3Y15.89%
EBIT Next 5Y14.86%
FCF growth 1Y133.33%
FCF growth 3Y49.68%
FCF growth 5Y23.37%
OCF growth 1Y82.8%
OCF growth 3Y24.36%
OCF growth 5Y11.19%
PEARSON PLC-SPONSORED ADR / PSO FAQ
What is the ChartMill fundamental rating of PEARSON PLC-SPONSORED ADR (PSO) stock?
ChartMill assigns a fundamental rating of 6 / 10 to PSO.
What is the valuation status for PSO stock?
ChartMill assigns a valuation rating of 5 / 10 to PEARSON PLC-SPONSORED ADR (PSO). This can be considered as Fairly Valued.
How profitable is PEARSON PLC-SPONSORED ADR (PSO) stock?
PEARSON PLC-SPONSORED ADR (PSO) has a profitability rating of 7 / 10.
Can you provide the financial health for PSO stock?
The financial health rating of PEARSON PLC-SPONSORED ADR (PSO) is 7 / 10.
Can you provide the expected EPS growth for PSO stock?
The Earnings per Share (EPS) of PEARSON PLC-SPONSORED ADR (PSO) is expected to grow by 2.77% in the next year.