PEARSON PLC-SPONSORED ADR (PSO) Stock Fundamental Analysis
USA - NYSE:PSO - US7050151056 - ADR
14.62 USD
-0.15 (-1.02%)
14.62 USD
0 (0%)
Taking everything into account, PSO scores 6 out of 10 in our fundamental rating. PSO was compared to 77 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 correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
PSO had positive earnings in the past year.
PSO had a positive operating cash flow in the past year.
Each year in the past 5 years PSO has been profitable.
Each year in the past 5 years PSO had a positive operating cash flow.
1.2 Ratios
PSO has a Return On Assets of 7.08%. This is in the better half of the industry: PSO outperforms 75.32% of its industry peers.
PSO's Return On Equity of 12.29% is fine compared to the rest of the industry. PSO outperforms 72.73% of its industry peers.
PSO's Return On Invested Capital of 8.65% is amongst the best of the industry. PSO outperforms 81.82% of its industry peers.
The Average Return On Invested Capital over the past 3 years for PSO is below the industry average of 9.48%.
The 3 year average ROIC (6.70%) for PSO is below the current ROIC(8.65%), indicating increased profibility in the last year.
| 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's Profit Margin of 12.53% is fine compared to the rest of the industry. PSO outperforms 76.62% of its industry peers.
In the last couple of years the Profit Margin of PSO has grown nicely.
With a decent Operating Margin value of 15.77%, PSO is doing good in the industry, outperforming 75.32% of the companies in the same industry.
PSO's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 51.45%, PSO is in line with its industry, outperforming 57.14% of the companies in the same 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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), PSO is destroying value.
Compared to 1 year ago, PSO has less shares outstanding
The number of shares outstanding for PSO has been reduced compared to 5 years ago.
The debt/assets ratio for PSO is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 2.89 indicates that PSO is not a great score, but indicates only limited risk for bankruptcy at the moment.
With a decent Altman-Z score value of 2.89, PSO is doing good in the industry, outperforming 71.43% of the companies in the same industry.
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.
PSO has a better Debt to FCF ratio (2.42) than 76.62% 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 48.05% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 2.42 | ||
| Altman-Z | 2.89 |
ROIC/WACC0.95
WACC9.1%
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 better Current ratio (2.31) than 80.52% of its industry peers.
PSO has a Quick Ratio of 2.24. This indicates that PSO is financially healthy and has no problem in meeting its short term obligations.
Looking at the Quick ratio, with a value of 2.24, PSO belongs to the top of the industry, outperforming 80.52% of the companies in the same industry.
| 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
PSO is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.39% yearly.
Based on estimates for the next years, PSO will show a small growth in Revenue. The Revenue will grow by 3.04% on average per year.
EPS Next Y3.68%
EPS Next 2Y7.05%
EPS Next 3Y8.39%
EPS Next 5YN/A
Revenue Next Year-0.19%
Revenue Next 2Y2.25%
Revenue Next 3Y3.04%
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.
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
Based on the Price/Earnings ratio of 17.61, the valuation of PSO can be described as rather expensive.
Based on the Price/Earnings ratio, PSO is valued a bit cheaper than the industry average as 72.73% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of PSO to the average of the S&P500 Index (27.08), we can say PSO is valued slightly cheaper.
Based on the Price/Forward Earnings ratio of 14.93, the valuation of PSO can be described as correct.
Based on the Price/Forward Earnings ratio, PSO is valued a bit cheaper than 76.62% of the companies in the same industry.
PSO is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 23.09, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.61 | ||
| Fwd PE | 14.93 |
4.2 Price Multiples
PSO's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. PSO is cheaper than 68.83% of the companies in the same industry.
PSO's Price/Free Cash Flow ratio is rather cheap when compared to the industry. PSO is cheaper than 88.31% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.38 | ||
| 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.
PSO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)4.78
PEG (5Y)15.29
EPS Next 2Y7.05%
EPS Next 3Y8.39%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.18%, PSO has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.95, PSO pays a better dividend. On top of this PSO pays more dividend than 94.81% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.30, PSO has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.18% |
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.
The dividend of PSO decreased in the last 3 years.
Dividend Growth(5Y)4%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
36.05% of the earnings are spent on dividend by PSO. This is a low number and sustainable payout ratio.
The dividend of PSO is growing, but earnings are growing more, so the dividend growth is sustainable.
DP36.05%
EPS Next 2Y7.05%
EPS Next 3Y8.39%
14.62
-0.15 (-1.02%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners77.62%
Inst Owner Change-0.2%
Ins Owners0.2%
Ins Owner ChangeN/A
Market Cap9.36B
Revenue(TTM)3.52B
Net Income(TTM)441.00M
Analysts68.57
Price Target16.89 (15.53%)
Short Float %0.28%
Short Ratio3.02
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.18% |
Yearly Dividend0.32
Dividend Growth(5Y)4%
DP36.05%
Div Incr Years2
Div Non Decr Years2
Ex-Date
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)-1.97%
PT rev (3m)-0.55%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)0.86%
EPS NY rev (3m)-5.21%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.61 | ||
| Fwd PE | 14.93 | ||
| P/S | 1.99 | ||
| P/FCF | 11.38 | ||
| P/OCF | 9.43 | ||
| P/B | 1.95 | ||
| P/tB | 8.99 | ||
| EV/EBITDA | 10.63 |
EPS(TTM)0.83
EY5.68%
EPS(NY)0.98
Fwd EY6.7%
FCF(TTM)1.28
FCFY8.78%
OCF(TTM)1.55
OCFY10.61%
SpS7.34
BVpS7.48
TBVpS1.63
PEG (NY)4.78
PEG (5Y)15.29
Graham Number11.82
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 | 2.89 |
F-Score8
WACC9.1%
ROIC/WACC0.95
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 Y3.68%
EPS Next 2Y7.05%
EPS Next 3Y8.39%
EPS Next 5YN/A
Revenue 1Y (TTM)-0.82%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%-1.82%
Revenue Next Year-0.19%
Revenue Next 2Y2.25%
Revenue Next 3Y3.04%
Revenue Next 5YN/A
EBIT growth 1Y9.47%
EBIT growth 3Y26.69%
EBIT growth 5Y5.08%
EBIT Next Year36.45%
EBIT Next 3Y14.89%
EBIT Next 5YN/A
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 of PEARSON PLC-SPONSORED ADR (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.
What are the PE and PB ratios of PEARSON PLC-SPONSORED ADR (PSO) stock?
The Price/Earnings (PE) ratio for PEARSON PLC-SPONSORED ADR (PSO) is 17.61 and the Price/Book (PB) ratio is 1.95.
What is the earnings growth outlook for PEARSON PLC-SPONSORED ADR?
The Earnings per Share (EPS) of PEARSON PLC-SPONSORED ADR (PSO) is expected to grow by 3.68% in the next year.