PEARSON PLC-SPONSORED ADR (PSO) Stock Fundamental Analysis
USA - NYSE:PSO - US7050151056 - ADR
14.25 USD
+0.03 (+0.21%)
14.25 USD
0 (0%)
Taking everything into account, PSO scores 6 out of 10 in our fundamental rating. PSO was compared to 75 industry peers in the Diversified Consumer Services industry. PSO has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. PSO has a decent growth rate and is not valued too expensively.
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.
PSO had positive earnings in each of the past 5 years.
Each year in the past 5 years PSO had a positive operating cash flow.
1.2 Ratios
PSO has a better Return On Assets (7.08%) than 74.67% of its industry peers.
Looking at the Return On Equity, with a value of 12.29%, PSO is in the better half of the industry, outperforming 72.00% of the companies in the same industry.
PSO has a better Return On Invested Capital (8.65%) than 81.33% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for PSO is below the industry average of 9.69%.
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 has a Profit Margin of 12.53%. This is in the better half of the industry: PSO outperforms 76.00% of its industry peers.
PSO's Profit Margin has improved in the last couple of years.
PSO has a better Operating Margin (15.77%) than 74.67% of its industry peers.
In the last couple of years the Operating Margin of PSO has grown nicely.
Looking at the Gross Margin, with a value of 51.45%, PSO is in line with its industry, outperforming 56.00% 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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so PSO is destroying value.
PSO has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, PSO has less shares outstanding
PSO has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 2.82 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 2.82, PSO is doing good in the industry, outperforming 68.00% of the companies in the same industry.
PSO has a debt to FCF ratio of 2.42. This is a good value and a sign of high solvency as PSO would need 2.42 years to pay back of all of its debts.
The Debt to FCF ratio of PSO (2.42) is better than 77.33% of its industry peers.
A Debt/Equity ratio of 0.40 indicates that PSO is not too dependend on debt financing.
PSO's Debt to Equity ratio of 0.40 is in line compared to the rest of the industry. PSO outperforms 46.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 2.42 | ||
| Altman-Z | 2.82 |
ROIC/WACC0.93
WACC9.3%
2.3 Liquidity
A Current Ratio of 2.31 indicates that PSO has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 2.31, PSO is in the better half of the industry, outperforming 78.67% of the companies in the same industry.
A Quick Ratio of 2.24 indicates that PSO has no problem at all paying its short term obligations.
Looking at the Quick ratio, with a value of 2.24, PSO is in the better half of the industry, outperforming 78.67% 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%.
PSO shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 1.15% yearly.
The Revenue has decreased by -0.82% in the past year.
Measured over the past years, PSO shows a decrease in Revenue. The Revenue has been decreasing by -1.70% on average per year.
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
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
The Price/Earnings ratio is 16.96, which indicates a correct valuation of PSO.
Compared to the rest of the industry, the Price/Earnings ratio of PSO indicates a somewhat cheap valuation: PSO is cheaper than 77.33% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 27.86. PSO is valued slightly cheaper when compared to this.
With a Price/Forward Earnings ratio of 14.54, PSO is valued correctly.
81.33% of the companies in the same industry are more expensive than PSO, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of PSO to the average of the S&P500 Index (23.32), we can say PSO is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.96 | ||
| Fwd PE | 14.54 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PSO is valued a bit cheaper than 73.33% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, PSO is valued cheaply inside the industry as 90.67% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.08 | ||
| EV/EBITDA | 10.28 |
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.
PSO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)4.61
PEG (5Y)14.73
EPS Next 2Y7.05%
EPS Next 3Y8.39%
5. Dividend
5.1 Amount
PSO has a Yearly Dividend Yield of 2.30%. Purely for dividend investing, there may be better candidates out there.
PSO's Dividend Yield is rather good when compared to the industry average which is at 1.94. PSO pays more dividend than 94.67% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.41, PSO has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.3% |
5.2 History
The dividend of PSO has a limited annual growth rate of 4.00%.
PSO has paid a dividend for at least 10 years, which is 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%
14.25
+0.03 (+0.21%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners77.62%
Inst Owner Change14.42%
Ins Owners0.2%
Ins Owner ChangeN/A
Market Cap9.15B
Analysts68.57
Price Target16.89 (18.53%)
Short Float %0.1%
Short Ratio1.08
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.3% |
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)1.4%
PT rev (3m)-3.06%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-0.07%
EPS NY rev (3m)-5.11%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)4.64%
Revenue NY rev (3m)-1.3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.96 | ||
| Fwd PE | 14.54 | ||
| P/S | 1.94 | ||
| P/FCF | 11.08 | ||
| P/OCF | 9.18 | ||
| P/B | 1.9 | ||
| P/tB | 8.75 | ||
| EV/EBITDA | 10.28 |
EPS(TTM)0.84
EY5.89%
EPS(NY)0.98
Fwd EY6.88%
FCF(TTM)1.29
FCFY9.02%
OCF(TTM)1.55
OCFY10.9%
SpS7.35
BVpS7.49
TBVpS1.63
PEG (NY)4.61
PEG (5Y)14.73
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%
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-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 | 2.82 |
F-Score8
WACC9.3%
ROIC/WACC0.93
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%