LSE:PSON

Stock Analysis Report

Executive Summary

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

Snowflake

Fundamentals

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


Market Performance


7 Day Return

-1.6%

LSE:PSON

-0.8%

GB Media

-2.0%

GB Market


1 Year Return

-11.2%

LSE:PSON

12.7%

GB Media

-5.8%

GB Market

PSON underperformed the Media industry which returned 11.9% over the past year.

PSON underperformed the Market in United Kingdom of Great Britain and Northern Ireland which returned -6.4% over the past year.


Share holder returns

PSONIndustryMarket
7 Day-1.6%-0.8%-2.0%
30 Day-7.7%3.1%-5.1%
90 Day1.4%7.0%-3.3%
1 Year-9.2%-11.2%16.7%12.7%-1.5%-5.8%
3 Year4.3%-6.0%15.5%2.0%17.7%3.9%
5 Year-11.4%-27.8%41.3%15.5%26.9%0.2%

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 based on future cash flows and its price relative to the stock market?

39%

Discount to future cash flow value


Intrinsic Value Based on Future Cash Flows

Pearson's share price is below the future cash flow value, and at a moderate discount (> 20%).

Pearson's share price is below the future cash flow value, but not at a substantial discount (< 40%).


Price Based on Earnings

Pearson is good value based on earnings compared to the GB Media industry average.

Pearson is good value based on earnings compared to the United Kingdom of Great Britain and Northern Ireland market.


Price Based on Expected Growth

Pearson is poor value based on expected growth next year.


Price Based on Value of Assets

Pearson is overvalued based on assets compared to the GB Media industry average.


Next Steps

Future Growth

How is Pearson expected to perform in the next 1 to 3 years based on estimates from 17 analysts?

10.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Pearson's revenue is expected to grow by 0.7% yearly, however this is not considered high growth (20% yearly).

Pearson's earnings are expected to grow by 10.3% yearly, however this is not considered high growth (20% yearly).

Pearson's revenue growth is positive but not above the United Kingdom of Great Britain and Northern Ireland market average.

Pearson's earnings growth is positive but not above the United Kingdom of Great Britain and Northern Ireland market average.

Pearson's earnings growth is expected to exceed the low risk savings rate of 1.2%.


Earnings per Share Growth Estimates


Future Return on Equity

Pearson is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).


Next Steps

Past Performance

How has Pearson performed over the past 5 years?

10.1%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Pearson's year on year earnings growth rate has been positive over the past 5 years.

Pearson's 1-year earnings growth is negative, it can't be compared to the 5-year average.

Pearson's 1-year earnings growth is negative, it can't be compared to the GB Media industry average.


Return on Equity

Pearson has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).


Return on Assets

Pearson used its assets more efficiently than the GB Media industry average last year based on Return on Assets.


Return on Capital Employed

Pearson has significantly improved its use of capital last year versus 3 years ago (Return on Capital Employed).


Next Steps

Financial Health

How is Pearson's financial position?


Financial Position Analysis

Pearson is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.

Pearson's cash and other short term assets cover its long term commitments.


Debt to Equity History and Analysis

Pearson's level of debt (28.1%) compared to net worth is satisfactory (less than 40%).

The level of debt compared to net worth has been reduced over the past 5 years (47.2% vs 28.1% today).

Debt is well covered by operating cash flow (38.8%, greater than 20% of total debt).

Interest payments on debt are well covered by earnings (EBIT is 23.8x coverage).


Balance Sheet

Low level of unsold assets.

Debt is covered by short term assets, assets are 2.3x debt.


Next Steps

Dividend

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

2.68%

Expected Dividend Yield


Dividend Yield and Payments Analysis

Pearson's pays a higher dividend yield than the bottom 25% of dividend payers in United Kingdom of Great Britain and Northern Ireland (2.08%).

Pearson's dividend is below the markets top 25% of dividend payers in United Kingdom of Great Britain and Northern Ireland (5.76%).

Dividends per share have been volatile in the past 10 years (annual drop of over 20%).

Dividends per share have fallen over the past 10 years.


Current Payout to Shareholders

Dividends paid are well covered by earnings (3x coverage).


Future Payout to Shareholders

Dividends after 3 years are expected to be well covered by earnings (2.9x coverage).


Next Steps

  • Explore strong dividend paying companies in the media industry.

Management

What is the CEO of Pearson's salary, the management and board of directors tenure and is there insider trading?

4.0yrs

Average management tenure


CEO

John Fallon (56yo)

6.6yrs

Tenure

UK£3,142,000

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

John's remuneration is about average for companies of similar size in United Kingdom of Great Britain and Northern Ireland.

John's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Management Age and Tenure

4.0yrs

Average Tenure

54yo

Average Age

The tenure for the Pearson management team is about average.


Board Age and Tenure

6.8yrs

Average Tenure

59yo

Average Age

The tenure for the Pearson board of directors is about average.


Insider Trading

More shares have been bought than sold by Pearson individual insiders in the past 3 months, but not in substantial volumes.


Recent Insider Transactions

BuyUK£21,42001 Jul 19
Tim Score
EntityIndividual
Role
Member of the Board of Directors
Shares2,625
Max PriceUK£8.16
BuyUK£2,15401 Jul 19
Vivienne Cox
EntityIndividual
Role
Lead Director
Shares264
Max PriceUK£8.16
BuyUK£1,43601 Jul 19
Graeme Pitkethly
EntityIndividual
Shares176
Max PriceUK£8.16
BuyUK£14,16601 Jul 19
Elizabeth P. Corley
EntityIndividual
Role
Member of the Board of Directors
Shares1,736
Max PriceUK£8.16
BuyUK£3,98201 Jul 19
Lincoln Wallen
EntityIndividual
Shares488
Max PriceUK£8.16
BuyUK£1,43601 Jul 19
Sherry Coutu
EntityIndividual
Shares176
Max PriceUK£8.16
BuyUK£21,48918 Dec 18
Tim Score
EntityIndividual
Role
Member of the Board of Directors
Shares2,288
Max PriceUK£9.39
BuyUK£2,16018 Dec 18
Vivienne Cox
EntityIndividual
Role
Lead Director
Shares230
Max PriceUK£9.39
BuyUK£3,99218 Dec 18
Lincoln Wallen
EntityIndividual
Shares425
Max PriceUK£9.39
BuyUK£14,23818 Dec 18
Elizabeth P. Corley
EntityIndividual
Role
Member of the Board of Directors
Shares1,516
Max PriceUK£9.39

Ownership Breakdown


Management Team

  • John Fallon (56yo)

    CEO & Executive Director

    • Tenure: 6.6yrs
    • Compensation: £3.14m
  • Tim Bozik

    President of Global Product

    • Tenure: 3.6yrs
  • Albert Hitchcock (54yo)

    Chief Technology & Operations Officer

  • Coram Williams (45yo)

    CFO & Executive Director

    • Tenure: 4.0yrs
    • Compensation: £1.84m
  • Deepak Mehrotra (55yo)

    Managing Director of India Business

    • Tenure: 5.8yrs
  • Gio Giovannelli

    President of Growth Markets

  • Bjarne Tellmann

    General Counsel & Chief Legal Officer

    • Tenure: 2.6yrs
  • Rod Bristow

    President of UK & Core Markets

    • Tenure: 9.6yrs
  • Tom Waldron

    Vice President of Investor Relations

  • Anna Persson (49yo)

    Chief Human Resources Officer

    • Tenure: 1.5yrs

Board Members

  • John Fallon (56yo)

    CEO & Executive Director

    • Tenure: 6.8yrs
    • Compensation: £3.14m
  • David Poldoian (66yo)

    Member of Strategic Advisory Board

    • Tenure: 11.8yrs
  • Tim Score (58yo)

    Independent Non-Executive Director

    • Tenure: 4.6yrs
    • Compensation: £116.00k
  • Sidney Taurel (70yo)

    Chairman

    • Tenure: 3.6yrs
    • Compensation: £511.00k
  • Robert Olin

    Member of Strategic Advisory Board

    • Tenure: 11.8yrs
  • Coram Williams (45yo)

    CFO & Executive Director

    • Tenure: 4.0yrs
    • Compensation: £1.84m
  • Thomas Rabe (54yo)

    Chairman & CEO of Bertelsmann

  • Anne Moore

    Member of Strategic Advisory Board

    • Tenure: 11.8yrs
  • Vivienne Cox (60yo)

    Senior Independent Director

    • Tenure: 7.6yrs
    • Compensation: £131.00k
  • Elizabeth P. Corley (63yo)

    Independent Non-Executive Director

    • Tenure: 5.3yrs
    • Compensation: £115.00k

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£6.340b
  • Shares outstanding: 778.55m
  • Website: Click here

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
PSONLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
PSONYSE (New York Stock Exchange)SPONSORED ADRUSUSDSep 2000
PESADB (Deutsche Boerse AG)SPONSORED ADRDEEURSep 2000

Biography

Pearson plc provides educational products and services to institutions, governments, professional bodies, and individual learners worldwide. The company operates through North America, Core, and Growth seg ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/08/16 20:46
End of Day Share Price2019/08/16 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


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.