PEARSON PLC-SPONSORED ADR (PSO) Stock Fundamental Analysis
NYSE:PSO - US7050151056 - ADR
14.04 USD
-0.2 (-1.4%)
14.04 USD
0 (0%)
We assign a fundamental rating of 6 out of 10 to PSO. PSO was compared to 73 industry peers in the Diversified Consumer Services industry. PSO gets an excellent profitability rating and is at the same time showing great financial health properties. PSO is not valued too expensively and it also shows a decent 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.
PSO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of PSO (7.08%) is better than 73.97% 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 71.23% of the companies in the same industry.
PSO has a Return On Invested Capital of 8.65%. This is amongst the best in the industry. PSO outperforms 80.82% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for PSO is below the industry average of 9.88%.
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
With a decent Profit Margin value of 12.53%, PSO is doing good in the industry, outperforming 75.34% of the companies in the same industry.
PSO's Profit Margin has improved in the last couple of years.
The Operating Margin of PSO (15.77%) is better than 73.97% of its industry peers.
In the last couple of years the Operating Margin of PSO has grown nicely.
PSO's Gross Margin of 51.45% is in line compared to the rest of the industry. PSO outperforms 56.16% of its industry peers.
PSO's Gross Margin has been stable in the last couple of years.
| 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.
The number of shares outstanding for PSO has been reduced compared to 1 year ago.
Compared to 5 years ago, PSO has less shares outstanding
The debt/assets ratio for PSO is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 2.80 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 2.80, PSO is in the better half of the industry, outperforming 69.86% 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.
Looking at the Debt to FCF ratio, with a value of 2.42, PSO is in the better half of the industry, outperforming 76.71% of the companies in the same industry.
PSO has a Debt/Equity ratio of 0.40. This is a healthy value indicating a solid balance between debt and equity.
PSO's Debt to Equity ratio of 0.40 is in line compared to the rest of the industry. PSO outperforms 45.21% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 2.42 | ||
| Altman-Z | 2.8 |
ROIC/WACC0.8
WACC10.74%
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 78.08% of its industry peers.
A Quick Ratio of 2.24 indicates that PSO has no problem at all paying its short term obligations.
PSO's Quick ratio of 2.24 is fine compared to the rest of the industry. PSO outperforms 78.08% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.31 | ||
| Quick Ratio | 2.24 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.29% over the past year.
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.
Looking at the last year, PSO shows a decrease in Revenue. The Revenue has decreased by -0.82% in the last year.
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 8.47% yearly.
PSO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 1.19% yearly.
EPS Next Y3.75%
EPS Next 2Y7.48%
EPS Next 3Y8.47%
EPS Next 5YN/A
Revenue Next Year-4.61%
Revenue Next 2Y2.33%
Revenue Next 3Y1.19%
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.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 16.71 indicates a correct valuation of PSO.
PSO's Price/Earnings ratio is a bit cheaper when compared to the industry. PSO is cheaper than 75.34% of the companies in the same industry.
When comparing the Price/Earnings ratio of PSO to the average of the S&P500 Index (27.03), we can say PSO is valued slightly cheaper.
A Price/Forward Earnings ratio of 14.15 indicates a correct valuation of PSO.
Based on the Price/Forward Earnings ratio, PSO is valued a bit cheaper than the industry average as 79.45% of the companies are valued more expensively.
PSO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 22.54.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.71 | ||
| Fwd PE | 14.15 |
4.2 Price Multiples
68.49% of the companies in the same industry are more expensive than PSO, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of PSO indicates a rather cheap valuation: PSO is cheaper than 89.04% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.87 | ||
| EV/EBITDA | 10.13 |
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.
The decent profitability rating of PSO may justify a higher PE ratio.
PEG (NY)4.45
PEG (5Y)14.51
EPS Next 2Y7.48%
EPS Next 3Y8.47%
5. Dividend
5.1 Amount
PSO has a Yearly Dividend Yield of 2.30%.
Compared to an average industry Dividend Yield of 3.59, PSO pays a better dividend. On top of this PSO pays more dividend than 91.78% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.45, 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 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 2Y7.48%
EPS Next 3Y8.47%
14.04
-0.2 (-1.4%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners76.58%
Inst Owner Change14.42%
Ins Owners0.19%
Ins Owner ChangeN/A
Market Cap9.07B
Analysts68.57
Price Target16.99 (21.01%)
Short Float %0.11%
Short Ratio1.05
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)1.27%
PT rev (3m)-5.49%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-6.17%
EPS NY rev (3m)-5.04%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)-4.85%
Revenue NY rev (3m)-5.68%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.71 | ||
| Fwd PE | 14.15 | ||
| P/S | 1.9 | ||
| P/FCF | 10.87 | ||
| P/OCF | 9 | ||
| P/B | 1.87 | ||
| P/tB | 8.59 | ||
| EV/EBITDA | 10.13 |
EPS(TTM)0.84
EY5.98%
EPS(NY)0.99
Fwd EY7.07%
FCF(TTM)1.29
FCFY9.2%
OCF(TTM)1.56
OCFY11.11%
SpS7.38
BVpS7.52
TBVpS1.63
PEG (NY)4.45
PEG (5Y)14.51
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 | 2.8 |
F-Score8
WACC10.74%
ROIC/WACC0.8
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 Y3.75%
EPS Next 2Y7.48%
EPS Next 3Y8.47%
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-4.61%
Revenue Next 2Y2.33%
Revenue Next 3Y1.19%
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%