LSE:PSON

Stock Analysis Report

Executive Summary

Pearson plc provides educational products and services to governments, educational institutions, corporations, and professional bodies worldwide.


Snowflake Analysis

Flawless balance sheet and fair value.


Similar Companies

Share Price & News

How has Pearson's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PSON has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

23.4%

PSON

11.1%

GB Media

10.0%

GB Market


1 Year Return

-33.9%

PSON

-35.4%

GB Media

-23.0%

GB Market

Return vs Industry: PSON matched the UK Media industry which returned -33.8% over the past year.

Return vs Market: PSON underperformed the UK Market which returned -22.7% over the past year.


Shareholder returns

PSONIndustryMarket
7 Day23.4%11.1%10.0%
30 Day0.6%-29.0%-17.6%
90 Day-12.0%-43.3%-27.3%
1 Year-30.5%-33.9%-32.7%-35.4%-18.9%-23.0%
3 Year-5.4%-17.1%-42.9%-50.2%-12.9%-24.2%
5 Year-51.9%-60.9%-43.1%-54.8%1.6%-21.8%

Price Volatility Vs. Market

How volatile is Pearson's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Pearson undervalued compared to its fair value and its price relative to the market?

26.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PSON (£5.61) is trading below our estimate of fair value (£7.59)

Significantly Below Fair Value: PSON is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: PSON is good value based on its PE Ratio (16.5x) compared to the Media industry average (17.3x).

PE vs Market: PSON is poor value based on its PE Ratio (16.5x) compared to the UK market (12.5x).


Price to Earnings Growth Ratio

PEG Ratio: PSON's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: PSON is overvalued based on its PB Ratio (1x) compared to the GB Media industry average (0.8x).


Next Steps

Future Growth

How is Pearson forecast to perform in the next 1 to 3 years based on estimates from 14 analysts?

-9.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PSON's earnings are forecast to decline over the next 3 years (-9.1% per year).

Earnings vs Market: PSON's earnings are forecast to decline over the next 3 years (-9.1% per year).

High Growth Earnings: PSON's earnings are forecast to decline over the next 3 years.

Revenue vs Market: PSON's revenue (0.4% per year) is forecast to grow slower than the UK market (2.6% per year).

High Growth Revenue: PSON's revenue (0.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PSON's Return on Equity is forecast to be low in 3 years time (5.8%).


Next Steps

Past Performance

How has Pearson performed over the past 5 years?

26.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PSON has a large one-off loss of £141.0M impacting its December 31 2019 financial results.

Growing Profit Margin: PSON's current net profit margins (6.8%) are lower than last year (14.2%).


Past Earnings Growth Analysis

Earnings Trend: PSON has become profitable over the past 5 years, growing earnings by 26.6% per year.

Accelerating Growth: PSON's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: PSON had negative earnings growth (-55.1%) over the past year, making it difficult to compare to the Media industry average (-1.8%).


Return on Equity

High ROE: PSON's Return on Equity (6.2%) is considered low.


Next Steps

Financial Health

How is Pearson's financial position?


Financial Position Analysis

Short Term Liabilities: PSON's short term assets (£3.2B) exceed its short term liabilities (£1.5B).

Long Term Liabilities: PSON's short term assets (£3.2B) exceed its long term liabilities (£1.8B).


Debt to Equity History and Analysis

Debt Level: PSON's debt to equity ratio (20%) is considered satisfactory.

Reducing Debt: PSON's debt to equity ratio has reduced from 38.4% to 20% over the past 5 years.


Balance Sheet

Inventory Level: PSON has a low level of unsold assets or inventory.

Debt Coverage by Assets: PSON's debt is covered by short term assets (assets are 3.7x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: PSON is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: PSON is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

What is Pearson's current dividend yield, its reliability and sustainability?

3.48%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: PSON's dividend (3.48%) is higher than the bottom 25% of dividend payers in the UK market (2.7%).

High Dividend: PSON's dividend (3.48%) is low compared to the top 25% of dividend payers in the UK market (7.3%).


Stability and Growth of Payments

Stable Dividend: PSON's dividend payments have been volatile in the past 10 years.

Growing Dividend: PSON's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (57.4%), PSON's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PSON's dividends in 3 years are forecast to be well covered by earnings (48.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.6yrs

Average management tenure


CEO

John Fallon (56yo)

7.17s

Tenure

UK£1,857,000

Compensation

Mr. John Fallon is Chief Executive of Pearson PLC since January 1, 2013 and has been its Director since October 3, 2012. Mr. Fallon had been responsible for education businesses outside North America and a ...


CEO Compensation Analysis

Compensation vs Market: John's total compensation ($USD2.30M) is below average for companies of similar size in the UK market ($USD3.42M).

Compensation vs Earnings: John's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
John Fallon
CEO & Executive Director7.17yrsUK£1.86m0.053% £2.2m
Coram Williams
Group CFO & Executive Director4.58yrsUK£607.00k0.0075% £314.7k
Albert Hitchcock
Chief Technology & Operations Officerno datano data0.015% £635.6k
Joanne Russell
Senior Vice President of Investor Relationsno datano datano data
Bjarne Tellmann
General Counsel & Chief Legal Officer3.17yrsno datano data
Anna Persson
Chief Human Resources Officer2yrsno datano data
Tim Bozik
President of Global Product & North America Courseware4.17yrsno datano data
Kenneth Bristow
President of Pearson UK & Global Online Learning10.17yrsno data0.014% £572.2k
Deepak Mehrotra
Managing Director of India Business6.42yrsno datano data
Giovanni Giovannelli
President of Internationalno datano datano data

4.6yrs

Average Tenure

54yo

Average Age

Experienced Management: PSON's management team is considered experienced (4.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
John Fallon
CEO & Executive Director7.17yrsUK£1.86m0.053% £2.2m
Coram Williams
Group CFO & Executive Director4.58yrsUK£607.00k0.0075% £314.7k
Thomas Rabe
Chairman & CEO of Bertelsmannno datano datano data
Sidney Taurel
Independent Chairman4.17yrsUK£508.00k0.041% £1.7m
Tim Score
Independent Non-Executive Director5.17yrsUK£117.00k0.0051% £212.6k
Vivienne Cox
Senior Independent Director8.17yrsUK£129.00k0.00099% £41.6k
David Poldoian
Member of Strategic Advisory Board12.33yrsno datano data
Robert Olin
Member of Strategic Advisory Board12.33yrsno datano data
Anne Moore
Member of Strategic Advisory Board12.33yrsno datano data
Elizabeth P. Corley
Independent Non-Executive Director5.83yrsUK£115.00k0.0029% £123.5k

7.4yrs

Average Tenure

59yo

Average Age

Experienced Board: PSON's board of directors are considered experienced (7.4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Pearson plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Pearson plc
  • Ticker: PSON
  • Exchange: LSE
  • Founded: 1844
  • Industry: Publishing
  • Sector: Media
  • Market Cap: UK£4.201b
  • Shares outstanding: 749.15m
  • Website: https://www.pearson.com

Number of Employees


Location

  • Pearson plc
  • 80 Strand
  • London
  • Greater London
  • WC2R 0RL
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
PSOR.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
PSONLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
PESDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
PESXTRA (XETRA Trading Platform)YesOrdinary SharesDEEURJan 1992
PSONLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
PSONYSE (New York Stock Exchange)SPONS ADR EACH REP 1 ORD GBP0.25USUSDSep 2000
PESADB (Deutsche Boerse AG)SPONS ADR EACH REP 1 ORD GBP0.25DEEURSep 2000

Biography

Pearson plc provides educational products and services to governments, educational institutions, corporations, and professional bodies worldwide. The company operates through North America, Core, and Growth segments. It offers courseware services, including curriculum materials provided in book form and/or through access to digital content; and assessments, such as test development, processing, and scoring services. The company also operates schools, colleges, and universities; and provides online learning services in partnership with universities and other academic institutions. In addition, it delivers and installs off-the-shelf software; and offers services to academic institutions, such as program development, student acquisition, education technology, and student support services, as well as undertakes contracts to process qualifying tests for individual professions and government departments under multi-year contractual arrangements. The company was founded in 1844 and is headquartered in London, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/03/30 20:46
End of Day Share Price2020/03/30 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.