PEARSON PLC-SPONSORED ADR (PSO)
US7050151056 - ADR
We assign a fundamental rating of 6 out of 10 to PSO. PSO was compared to 66 industry peers in the Diversified Consumer Services industry. PSO scores excellent on profitability, but there are some minor concerns on its financial health. 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
With an excellent Return On Assets value of 5.62%, PSO belongs to the best of the industry, outperforming 84.38% of the companies in the same industry.
PSO's Return On Equity of 9.51% is fine compared to the rest of the industry. PSO outperforms 78.13% of its industry peers.
PSO's Return On Invested Capital of 7.35% is fine compared to the rest of the industry. PSO outperforms 79.69% of its industry peers.
PSO had an Average Return On Invested Capital over the past 3 years of 4.91%. This is significantly below the industry average of 14.49%.
The 3 year average ROIC (4.91%) for PSO is below the current ROIC(7.35%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.62% | ||
| ROE | 9.51% | ||
| ROIC | 7.35% |
ROA(3y)3.78%
ROA(5y)3.84%
ROE(3y)6.38%
ROE(5y)6.66%
ROIC(3y)4.91%
ROIC(5y)5.01%
1.3 Margins
The Profit Margin of PSO (10.29%) is better than 87.50% of its industry peers.
In the last couple of years the Profit Margin of PSO has declined.
PSO has a Operating Margin of 13.96%. This is in the better half of the industry: PSO outperforms 78.13% of its industry peers.
PSO's Operating Margin has improved in the last couple of years.
PSO's Gross Margin of 49.95% is in line compared to the rest of the industry. PSO outperforms 46.88% of its industry peers.
PSO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.96% | ||
| PM (TTM) | 10.29% | ||
| GM | 49.95% |
OM growth 3Y7.25%
OM growth 5Y9.42%
PM growth 3Y1.93%
PM growth 5Y-6.29%
GM growth 3Y1.34%
GM growth 5Y-1.16%
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.
The number of shares outstanding for PSO has been reduced compared to 5 years ago.
Compared to 1 year ago, PSO has a worse debt to assets ratio.
2.2 Solvency
PSO has an Altman-Z score of 2.56. 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.
The Altman-Z score of PSO (2.56) is better than 73.44% of its industry peers.
The Debt to FCF ratio of PSO is 2.91, which is a good value as it means it would take PSO, 2.91 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 2.91, PSO is in the better half of the industry, outperforming 78.13% of the companies in the same industry.
PSO has a Debt/Equity ratio of 0.28. This is a healthy value indicating a solid balance between debt and equity.
PSO has a Debt to Equity ratio of 0.28. This is comparable to the rest of the industry: PSO outperforms 45.31% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.28 | ||
| Debt/FCF | 2.91 | ||
| Altman-Z | 2.56 |
ROIC/WACC0.93
WACC7.92%
2.3 Liquidity
A Current Ratio of 1.73 indicates that PSO should not have too much problems paying its short term obligations.
With a decent Current ratio value of 1.73, PSO is doing good in the industry, outperforming 64.06% of the companies in the same industry.
PSO has a Quick Ratio of 1.67. This is a normal value and indicates that PSO is financially healthy and should not expect problems in meeting its short term obligations.
PSO has a Quick ratio of 1.67. This is in the better half of the industry: PSO outperforms 64.06% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.73 | ||
| Quick Ratio | 1.67 |
3. Growth
3.1 Past
PSO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.04%, which is quite good.
The Earnings Per Share has been decreasing by -3.85% on average over the past years.
Looking at the last year, PSO shows a decrease in Revenue. The Revenue has decreased by -4.35% in the last year.
Measured over the past years, PSO shows a decrease in Revenue. The Revenue has been decreasing by -2.31% on average per year.
EPS 1Y (TTM)12.04%
EPS 3Y26.72%
EPS 5Y-3.85%
EPS growth Q2Q10.65%
Revenue 1Y (TTM)-4.35%
Revenue growth 3Y2.65%
Revenue growth 5Y-2.31%
Revenue growth Q2Q-12.57%
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 10.37% yearly.
Based on estimates for the next years, PSO will show a small growth in Revenue. The Revenue will grow by 2.55% on average per year.
EPS Next Y10.07%
EPS Next 2Y10.77%
EPS Next 3Y10.37%
EPS Next 5YN/A
Revenue Next Year-0.7%
Revenue Next 2Y1.87%
Revenue Next 3Y2.55%
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
With a Price/Earnings ratio of 15.84, PSO is valued correctly.
Based on the Price/Earnings ratio, PSO is valued a bit cheaper than the industry average as 76.56% of the companies are valued more expensively.
PSO is valuated rather cheaply when we compare the Price/Earnings ratio to 28.15, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 14.32, which indicates a correct valuation of PSO.
Based on the Price/Forward Earnings ratio, PSO is valued a bit cheaper than the industry average as 79.69% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 20.20. PSO is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.84 | ||
| Fwd PE | 14.32 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PSO is valued a bit cheaper than 71.88% of the companies in the same industry.
PSO's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. PSO is cheaper than 78.13% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.32 | ||
| EV/EBITDA | 9.54 |
4.3 Compensation for Growth
PSO's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
PSO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.57
PEG (5Y)N/A
EPS Next 2Y10.77%
EPS Next 3Y10.37%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.27%, PSO has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 32.84, PSO pays a better dividend. On top of this PSO pays more dividend than 93.75% of the companies listed in the same industry.
PSO's Dividend Yield is comparable with the S&P500 average which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.27% |
5.2 History
The dividend of PSO has a limited annual growth rate of 4.79%.
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)4.79%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
40.74% of the earnings are spent on dividend by PSO. This is a bit on the high side, but may be sustainable.
The dividend of PSO is growing, but earnings are growing more, so the dividend growth is sustainable.
DP40.74%
EPS Next 2Y10.77%
EPS Next 3Y10.37%
PEARSON PLC-SPONSORED ADR
NYSE:PSO (5/17/2024, 7:21:31 PM)
After market: 12.2 0 (0%)12.2
-0.01 (-0.08%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap8.24B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.27% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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EPS beat(4)
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EPS beat(8)
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EPS beat(12)
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EPS beat(16)
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Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
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Revenue beat(4)
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Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.84 | ||
| Fwd PE | 14.32 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.57
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.62% | ||
| ROE | 9.51% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 13.96% | ||
| PM (TTM) | 10.29% | ||
| GM | 49.95% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.55
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.28 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.73 | ||
| Quick Ratio | 1.67 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)12.04%
EPS 3Y26.72%
EPS 5Y
EPS growth Q2Q
EPS Next Y10.07%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)-4.35%
Revenue growth 3Y2.65%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y