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 good 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

-3.5%

PSON

-0.04%

GB Media

1.1%

GB Market


1 Year Return

-12.8%

PSON

21.7%

GB Media

2.7%

GB Market

Return vs Industry: PSON underperformed the UK Media industry which returned 21.7% over the past year.

Return vs Market: PSON underperformed the UK Market which returned 2.7% over the past year.


Shareholder returns

PSONIndustryMarket
7 Day-3.5%-0.04%1.1%
30 Day-21.0%-1.0%-1.7%
90 Day-22.6%3.6%-2.7%
1 Year-10.8%-12.8%26.0%21.7%7.8%2.7%
3 Year0.6%-9.4%16.1%3.2%19.3%4.7%
5 Year-25.5%-39.2%47.5%20.3%38.0%8.1%

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?

8.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: PSON (£6.91) is trading below our estimate of fair value (£7.51)

Significantly Undervalued: PSON is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: PSON is good value based on its PE Ratio (12x) compared to the Media industry average (21.2x).

PE vs Market: PSON is good value based on its PE Ratio (12x) compared to the UK market (16.4x).


Price to Earnings Growth Ratio

Low PEG Ratio: PSON is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: PSON is good value based on its PB Ratio (1.3x) compared to the GB Media industry average (1.6x).


Next Steps

Future Growth

How is Pearson forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

9.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PSON's forecast earnings growth (9.1% per year) is above the savings rate (1.2%).

Earnings vs Market: PSON's earnings (9.1% per year) are forecast to grow slower than the UK market (12.3% per year).

High Growth Earnings: PSON's earnings are forecast to grow, but not significantly.

Revenue vs Market: PSON's revenue (0.4% per year) is forecast to grow slower than the UK market (3.8% 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

High Future ROE: PSON's Return on Equity is forecast to be low in 3 years time (9.7%).


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

Earnings Trend: PSON's earnings have grown by 10.1% per year over the past 5 years.

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 (-26.8%) over the past year, making it difficult to compare to the Media industry average (2.8%).


Return on Equity

High ROE: PSON's Return on Equity (10.5%) is considered low.


Return on Assets

ROA vs Industry: PSON has a higher Return on Assets than the Media industry average last year.


Return on Capital Employed

ROCE Improving: PSON has significantly improved its Return on Capital Employed over the past 3 years.


Next Steps

Financial Health

How is Pearson's financial position?


Financial Position Analysis

Short Term Liabilities: PSON's short term assets (£2.7B) exceeds its short term liabilities (£1.4B)

Long Term Liabilities: PSON's short term assets (2.7B) exceeds its long term liabilities (2.3B)


Debt to Equity History and Analysis

Debt Level: PSON's debt to equity ratio (28.1%) is considered satisfactory

Reducing Debt: PSON's debt to equity ratio has reduced from 47.2% to 28.1% over the past 5 years.

Debt Coverage: PSON's debt is well covered by operating cash flow (38.8%).

Interest Coverage: PSON's interest payments on its debt are well covered by EBIT (23.8x coverage).


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 2.270310x debt).


Next Steps

Dividend

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

2.68%

Current Dividend Yield


Dividend Yield vs Market

company2.7%marketbottom25%2.0%markettop25%5.4%industryaverage2.7%forecastin3Years3.1%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: PSON's dividend (2.68%) is higher than the bottom 25% of dividend payers in the UK market (2.01%).

High Dividend: PSON's dividend (2.68%) is low compared to the top 25% of dividend payers in the UK market (5.44%).

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 reasonably low payout ratio (33%), PSON's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PSON's dividends in 3 years are forecast to be well covered by earnings (39.4% payout ratio).


Next Steps

Management

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

4.2yrs

Average management tenure


CEO

John Fallon (56yo)

6.8yrs

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

Compensation vs. Market: John's total compensation ($USD3.95M) is about average for companies of similar size in the UK market ($USD3.35M).

Compensation vs Earnings: 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

4.2yrs

Average Tenure

54yo

Average Age

Experienced Management: PSON's management team is considered experienced (4.2 years average tenure).


Board Age and Tenure

7.0yrs

Average Tenure

59yo

Average Age

Experienced Board: PSON's board of directors are considered experienced (7 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyUK£21,42001 Jul 19
Tim Score
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares2,625
Max PriceUK£8.16
BuyUK£2,15401 Jul 19
Vivienne Cox
EntityIndividual
Role
Lead Director
Senior Independent Director
Shares264
Max PriceUK£8.16
BuyUK£1,43601 Jul 19
Graeme Pitkethly
EntityIndividual
Shares176
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£14,16601 Jul 19
Elizabeth P. Corley
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,736
Max PriceUK£8.16
BuyUK£21,48918 Dec 18
Tim Score
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares2,288
Max PriceUK£9.39
BuyUK£2,16018 Dec 18
Vivienne Cox
EntityIndividual
Role
Lead Director
Senior Independent 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
Independent Non-Executive Director
Shares1,516
Max PriceUK£9.39

Ownership Breakdown


Management Team

  • John Fallon (56yo)

    CEO & Executive Director

    • Tenure: 6.8yrs
    • Compensation: UK£3.14m
  • Albert Hitchcock (54yo)

    Chief Technology & Operations Officer

    • Tenure: 0yrs
  • Rod Bristow

    President of UK & Core Markets

    • Tenure: 9.8yrs
  • Anna Persson (49yo)

    Chief Human Resources Officer

    • Tenure: 1.7yrs
  • Coram Williams (45yo)

    CFO & Executive Director

    • Tenure: 4.2yrs
    • Compensation: UK£1.84m
  • Bjarne Tellmann

    General Counsel & Chief Legal Officer

    • Tenure: 2.8yrs
  • Deepak Mehrotra (55yo)

    Managing Director of India Business

    • Tenure: 6yrs
  • Tim Bozik

    President of Global Product & Higher Education Courseware

    • Tenure: 3.8yrs
  • Gio Giovannelli

    President of Core & Growth Markets

    • Tenure: 0yrs
  • Tom Waldron

    Vice President of Investor Relations

    • Tenure: 0yrs

Board Members

  • Sidney Taurel (70yo)

    Independent Chairman

    • Tenure: 3.8yrs
    • Compensation: UK£511.00k
  • John Fallon (56yo)

    CEO & Executive Director

    • Tenure: 6.8yrs
    • Compensation: UK£3.14m
  • Thomas Rabe (54yo)

    Chairman & CEO of Bertelsmann

    • Tenure: 0yrs
  • Tim Score (58yo)

    Independent Non-Executive Director

    • Tenure: 4.8yrs
    • Compensation: UK£116.00k
  • Vivienne Cox (60yo)

    Senior Independent Director

    • Tenure: 7.8yrs
    • Compensation: UK£131.00k
  • David Poldoian (66yo)

    Member of Strategic Advisory Board

    • Tenure: 11.9yrs
  • Robert Olin

    Member of Strategic Advisory Board

    • Tenure: 11.9yrs
  • Anne Moore

    Member of Strategic Advisory Board

    • Tenure: 11.9yrs
  • Elizabeth P. Corley (63yo)

    Independent Non-Executive Director

    • Tenure: 5.4yrs
    • Compensation: UK£115.00k
  • Coram Williams (45yo)

    CFO & Executive Director

    • Tenure: 4.2yrs
    • Compensation: UK£1.84m

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£5.382b
  • Shares outstanding: 778.83m
  • 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
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 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 Analysis2019/10/14 20:38
End of Day Share Price2019/10/14 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.