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PEARSON PLC-SPONSORED ADR (PSO) Stock Fundamental Analysis

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

14.67  +0.14 (+0.96%)

After market: 14.65 -0.02 (-0.14%)

Fundamental Rating

6

Taking everything into account, PSO scores 6 out of 10 in our fundamental rating. PSO was compared to 71 industry peers in the Diversified Consumer Services industry. PSO scores excellent points on both the profitability and health parts. This is a solid base for a good stock. PSO is not valued too expensively and it also shows a decent growth rate.


Dividend Valuation Growth Profitability Health

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7

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.
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's Return On Assets of 7.08% is fine compared to the rest of the industry. PSO outperforms 71.83% 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 69.01% of the companies in the same industry.
With an excellent Return On Invested Capital value of 8.65%, PSO belongs to the best of the industry, outperforming 80.28% 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 10.25%.
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 RankSector 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%
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

The Profit Margin of PSO (12.53%) is better than 76.06% of its industry peers.
In the last couple of years the Profit Margin of PSO has grown nicely.
Looking at the Operating Margin, with a value of 15.77%, PSO is in the better half of the industry, outperforming 76.06% of the companies in the same industry.
PSO's Operating Margin has improved in the last couple of years.
PSO has a Gross Margin of 51.45%. This is comparable to the rest of the industry: PSO outperforms 59.15% of its industry peers.
In the last couple of years the Gross Margin of PSO has remained more or less at the same level.
Industry RankSector Rank
OM 15.77%
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%
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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7

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.
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

An Altman-Z score of 2.86 indicates that PSO is not a great score, but indicates only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.86, PSO is in the better half of the industry, outperforming 70.42% 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 Debt to FCF ratio of 2.42. This is in the better half of the industry: PSO outperforms 74.65% 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.
The Debt to Equity ratio of PSO (0.40) is comparable to the rest of the industry.
Industry RankSector Rank
Debt/Equity 0.4
Debt/FCF 2.42
Altman-Z 2.86
ROIC/WACC0.93
WACC9.29%
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

PSO has a Current Ratio of 2.31. This indicates that PSO is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of PSO (2.31) is better than 76.06% of its industry peers.
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 77.46% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 2.31
Quick Ratio 2.24
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 3.29%.
The Earnings Per Share has been growing slightly by 1.15% on average over the past years.
The Revenue has decreased by -0.82% in the past year.
The Revenue has been decreasing by -1.70% on average over the past years.
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 9.68% yearly.
Based on estimates for the next years, PSO will show a small growth in Revenue. The Revenue will grow by 2.81% on average per year.
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

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.
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

PSO is valuated rather expensively with a Price/Earnings ratio of 17.46.
PSO's Price/Earnings ratio is a bit cheaper when compared to the industry. PSO is cheaper than 70.42% of the companies in the same industry.
PSO is valuated rather cheaply when we compare the Price/Earnings ratio to 26.85, which is the current average of the S&P500 Index.
PSO is valuated correctly with a Price/Forward Earnings ratio of 14.24.
Based on the Price/Forward Earnings ratio, PSO is valued a bit cheaper than 76.06% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 34.98, PSO is valued rather cheaply.
Industry RankSector Rank
PE 17.46
Fwd PE 14.24
PSO Price Earnings VS Forward Price EarningsPSO Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of PSO indicates a somewhat cheap valuation: PSO is cheaper than 69.01% of the companies listed in the same industry.
87.32% of the companies in the same industry are more expensive than PSO, based on the Price/Free Cash Flow ratio.
Industry RankSector Rank
P/FCF 11.42
EV/EBITDA 10.47
PSO Per share dataPSO EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 2 4 6

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)1.83
PEG (5Y)15.16
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 2.29%.
Compared to an average industry Dividend Yield of 3.57, PSO pays a better dividend. On top of this PSO pays more dividend than 92.96% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, PSO has a dividend comparable with the average S&P500 company.
Industry RankSector Rank
Dividend Yield 2.29%

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
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 36.05% of its income as dividend. This is a sustainable payout ratio.
The dividend of PSO is growing, but earnings are growing more, so the dividend growth is sustainable.
DP36.05%
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 (8/19/2025, 5:05:00 PM)

After market: 14.65 -0.02 (-0.14%)

14.67

+0.14 (+0.96%)

Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)08-01 2025-08-01/bmo
Earnings (Next)N/A N/A
Inst Owners76.58%
Inst Owner Change14.42%
Ins Owners0.19%
Ins Owner ChangeN/A
Market Cap9.52B
Analysts68.57
Price Target16.78 (14.38%)
Short Float %0.07%
Short Ratio0.64
Dividend
Industry RankSector Rank
Dividend Yield 2.29%
Yearly Dividend0.32
Dividend Growth(5Y)4%
DP36.05%
Div Incr Years2
Div Non Decr Years2
Ex-Date08-15 2025-08-15 (0.089147)
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)-5.6%
PT rev (3m)-8.51%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-0.89%
EPS NY rev (3m)0.41%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)-0.87%
Revenue NY rev (3m)-0.87%
Valuation
Industry RankSector Rank
PE 17.46
Fwd PE 14.24
P/S 2
P/FCF 11.42
P/OCF 9.45
P/B 1.96
P/tB 9.02
EV/EBITDA 10.47
EPS(TTM)0.84
EY5.73%
EPS(NY)1.03
Fwd EY7.02%
FCF(TTM)1.28
FCFY8.76%
OCF(TTM)1.55
OCFY10.58%
SpS7.34
BVpS7.49
TBVpS1.63
PEG (NY)1.83
PEG (5Y)15.16
Profitability
Industry RankSector 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 RankSector 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 2.86
F-Score8
WACC9.29%
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 Y9.54%
EPS Next 2Y9.77%
EPS Next 3Y9.68%
EPS Next 5YN/A
Revenue 1Y (TTM)-0.82%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%-1.82%
Revenue Next Year0.25%
Revenue Next 2Y1.97%
Revenue Next 3Y2.81%
Revenue Next 5YN/A
EBIT growth 1Y9.47%
EBIT growth 3Y26.69%
EBIT growth 5Y5.08%
EBIT Next Year38.58%
EBIT Next 3Y15.6%
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%