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PEARSON PLC-SPONSORED ADR (PSO) Stock Fundamental Analysis

NYSE:PSO - New York Stock Exchange, Inc. - US7050151056 - ADR - Currency: USD

16.47  -0.17 (-1.02%)

After market: 16.47 0 (0%)

Fundamental Rating

6

PSO gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 72 industry peers in the Diversified Consumer Services industry. PSO has an excellent profitability rating, but there are some minor concerns on its financial health. PSO is not valued too expensively and it also shows a decent growth rate.


Dividend Valuation Growth Profitability Health

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8

1. Profitability

1.1 Basic Checks

PSO had positive earnings in the past year.
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.
PSO Yearly Net Income VS EBIT VS OCF VS FCFPSO Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 -1B -2B

1.2 Ratios

PSO has a better Return On Assets (6.30%) than 73.61% of its industry peers.
The Return On Equity of PSO (10.75%) is better than 70.83% of its industry peers.
The Return On Invested Capital of PSO (8.19%) is better than 81.94% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for PSO is below the industry average of 11.31%.
The last Return On Invested Capital (8.19%) for PSO is above the 3 year average (6.70%), which is a sign of increasing profitability.
Industry RankSector 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%
PSO Yearly ROA, ROE, ROICPSO Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 -20 -40

1.3 Margins

With an excellent Profit Margin value of 12.22%, PSO belongs to the best of the industry, outperforming 81.94% of the companies in the same industry.
In the last couple of years the Profit Margin of PSO has grown nicely.
PSO's Operating Margin of 15.37% is amongst the best of the industry. PSO outperforms 80.56% of its industry peers.
PSO's Operating Margin has improved in the last couple of years.
PSO has a Gross Margin (50.99%) which 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 RankSector 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%
PSO Yearly Profit, Operating, Gross MarginsPSO Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 20 -20 40 -40

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6

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so PSO is destroying value.
Compared to 1 year ago, PSO has less shares outstanding
PSO has less shares outstanding than it did 5 years ago.
The debt/assets ratio for PSO is higher compared to a year ago.
PSO Yearly Shares OutstandingPSO Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 200M 400M 600M
PSO Yearly Total Debt VS Total AssetsPSO Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B 8B 10B

2.2 Solvency

PSO has an Altman-Z score of 2.87. 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 (2.87) than 69.44% of its industry peers.
PSO has a debt to FCF ratio of 2.93. This is a good value and a sign of high solvency as PSO would need 2.93 years to pay back of all of its debts.
PSO has a Debt to FCF ratio of 2.93. This is in the better half of the industry: PSO outperforms 72.22% of its industry peers.
A Debt/Equity ratio of 0.29 indicates that PSO is not too dependend on debt financing.
PSO's Debt to Equity ratio of 0.29 is in line compared to the rest of the industry. PSO outperforms 50.00% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.29
Debt/FCF 2.93
Altman-Z 2.87
ROIC/WACC0.97
WACC8.48%
PSO Yearly LT Debt VS Equity VS FCFPSO Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 2B 4B 6B

2.3 Liquidity

A Current Ratio of 1.85 indicates that PSO should not have too much problems paying its short term obligations.
PSO has a better Current ratio (1.85) than 75.00% of its industry peers.
A Quick Ratio of 1.80 indicates that PSO should not have too much problems paying its short term obligations.
PSO has a better Quick ratio (1.80) than 75.00% of its industry peers.
Industry RankSector Rank
Current Ratio 1.85
Quick Ratio 1.8
PSO Yearly Current Assets VS Current LiabilitesPSO Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1B 2B 3B 4B

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4

3. Growth

3.1 Past

PSO 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, PSO shows a small growth in Earnings Per Share. The EPS has been growing by 1.15% on average per year.
The Revenue has decreased by -3.32% in the past year.
The Revenue has been decreasing by -1.70% on average over the past years.
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

PSO is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.68% yearly.
Based on estimates for the next years, PSO will show a small growth in Revenue. The Revenue will grow by 3.20% on average per year.
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

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.
PSO Yearly Revenue VS EstimatesPSO Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 1B 2B 3B 4B
PSO Yearly EPS VS EstimatesPSO Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 0.2 0.4 0.6 0.8

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5

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 19.38 indicates a rather expensive valuation of PSO.
Based on the Price/Earnings ratio, PSO is valued a bit cheaper than the industry average as 73.61% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of PSO to the average of the S&P500 Index (26.35), we can say PSO is valued slightly cheaper.
Based on the Price/Forward Earnings ratio of 17.59, the valuation of PSO can be described as rather expensive.
Based on the Price/Forward Earnings ratio, PSO is valued a bit cheaper than 69.44% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.20. PSO is valued slightly cheaper when compared to this.
Industry RankSector Rank
PE 19.38
Fwd PE 17.59
PSO Price Earnings VS Forward Price EarningsPSO Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 5 10 15 20 25

4.2 Price Multiples

68.06% of the companies in the same industry are more expensive than PSO, based on the Enterprise Value to EBITDA ratio.
PSO's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. PSO is cheaper than 79.17% of the companies in the same industry.
Industry RankSector Rank
P/FCF 15.93
EV/EBITDA 11.55
PSO Per share dataPSO EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 2 4 6 8

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 an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)2.03
PEG (5Y)16.82
EPS Next 2Y9.77%
EPS Next 3Y9.68%

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6

5. Dividend

5.1 Amount

PSO has a Yearly Dividend Yield of 1.97%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 4.26, PSO pays a better dividend. On top of this PSO pays more dividend than 93.06% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.40, PSO has a dividend comparable with the average S&P500 company.
Industry RankSector Rank
Dividend Yield 1.97%

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.
PSO has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)4%
Div Incr Years4
Div Non Decr Years4
PSO Yearly Dividends per sharePSO Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0.2 0.4 0.6

5.3 Sustainability

PSO pays out 35.94% 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.
DP35.94%
EPS Next 2Y9.77%
EPS Next 3Y9.68%
PSO Yearly Income VS Free CF VS DividendPSO Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 -1B -2B
PSO Dividend Payout.PSO Dividend Payout, showing the Payout Ratio.PSO Dividend Payout.PayoutRetained Earnings

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PEARSON PLC-SPONSORED ADR

NYSE:PSO (5/27/2025, 7:00:00 PM)

After market: 16.47 0 (0%)

16.47

-0.17 (-1.02%)

Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)05-02 2025-05-02
Earnings (Next)07-28 2025-07-28
Inst Owners83.16%
Inst Owner Change1.78%
Ins Owners0.26%
Ins Owner ChangeN/A
Market Cap10.87B
Analysts68
Price Target18.34 (11.35%)
Short Float %0.27%
Short Ratio2.1
Dividend
Industry RankSector Rank
Dividend Yield 1.97%
Yearly Dividend0.32
Dividend Growth(5Y)4%
DP35.94%
Div Incr Years4
Div Non Decr Years4
Ex-Date03-21 2025-03-21 (0.220073)
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)2.09%
PT rev (3m)12.75%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)0.5%
EPS NY rev (3m)-3.95%
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 RankSector Rank
PE 19.38
Fwd PE 17.59
P/S 2.26
P/FCF 15.93
P/OCF 12.78
P/B 1.98
P/tB 7.92
EV/EBITDA 11.55
EPS(TTM)0.85
EY5.16%
EPS(NY)0.94
Fwd EY5.68%
FCF(TTM)1.03
FCFY6.28%
OCF(TTM)1.29
OCFY7.83%
SpS7.3
BVpS8.3
TBVpS2.08
PEG (NY)2.03
PEG (5Y)16.82
Profitability
Industry RankSector 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 RankSector 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 2.87
F-Score7
WACC8.48%
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%