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Pearson
(LSE:PSON)
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Rating:65Neutral
Price Target:
1,320.00 p
▲(7.67% Upside)
Action:Downgraded
Date:08/05/26
The score is driven primarily by steady financial performance with strong operating profitability but weaker cash-flow momentum and rising leverage. The earnings call adds support due to strong H1 execution and reaffirmed guidance, while technicals are mixed and valuation is somewhat expensive versus the modest dividend yield.
Positive Factors
Strong profitability
High and stable gross and operating margins indicate durable core economics in content, platforms and assessments. Consistent margin profile supports reinvestment in digital products and cushioning versus cyclical revenue swings, preserving long-term operating cash generation.
Negative Factors
Rising leverage
Increasing leverage after accelerated buybacks and payouts reduces financial flexibility and raises interest sensitivity. Higher net debt limits capacity for large M&A or cushioning against demand shocks, making capital allocation trade-offs more constrained over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong profitability
High and stable gross and operating margins indicate durable core economics in content, platforms and assessments. Consistent margin profile supports reinvestment in digital products and cushioning versus cyclical revenue swings, preserving long-term operating cash generation.
Read all positive factors
Pearson (PSON) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£7.17B
Dividend Yield1.35%
Average Volume (3M)1.76M
Price to Earnings (P/E)23.5
Beta (1Y)0.32
Revenue Growth3.24%
EPS Growth-25.23%
CountryUK
Employees15,165
SectorCommunication Services
Sector Strength97
IndustryPublishing
Share Statistics
EPS (TTM)0.51
Shares Outstanding601,399,300
10 Day Avg. Volume1,970,689
30 Day Avg. Volume1,759,776
Financial Highlights & Ratios
PEG Ratio-1.01
Price to Book (P/B)1.87
Price to Sales (P/S)1.91
P/FCF Ratio10.35
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£1,302.50Price Target Upside6.24% Upside
Rating ConsensusHold
Number of Analyst Covering8
EPS Forecast (FY)0.71
Revenue Forecast (FY)£3.72B
Pearson Business Overview & Revenue Model
Company Description
Pearson plc operates internationally, providing a comprehensive array of educational materials, assessment solutions, and related services across the United Kingdom, the United States, Canada, the Asia Pacific region, and numerous other European c...
How the Company Makes Money
Pearson makes money primarily by selling education products and services across several major revenue streams: (1) Digital and print courseware and learning platforms: Pearson earns revenue from the sale or subscription licensing of higher educati...
Pearson Earnings Call Summary
Earnings Call Date:Jul 31, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Feb 26, 2027
Earnings Call Sentiment Positive
The call emphasizes solid H1 financial results (revenue +4%, adjusted operating profit +14%, EPS +18–19%), strong free cash flow and continued confidence in full-year guidance. Several strategic positives were highlighted: robust Virtual Learning momentum (+19% revenue), Inclusive Access acceleration (23% in Q2), enterprise skilling and rapid AI lab certification rollout, operational synergies (AI customer service at ~40% interactions, incentive consolidation) and product innovation with strong early learning outcomes. Key challenges include technical issues on the new UK primary testing platform, pockets of weakness in English Language Learning (ELL) driven by weaker international mobility and migration policy, margin pressure in Assessments & Qualifications from sales mix and one-off SATs delivery costs, and the revenue impact from the loss of the New Jersey contract. Overall, the positive financial performance, cash generation, and strategic momentum outweigh the operational and market headwinds noted, supporting a constructive outlook.Positive Updates
Group Financial Performance
Underlying group revenue up 4% in H1; adjusted operating profit up 14% underlying to £226m; margin expanded 140 basis points to 15.5%. Adjusted EPS increased 19% at constant exchange rates (18% headline) to 28.9p. Free cash flow rose by £103m to £259m. Company executed an accelerated £350m share buyback and proposed a 5% interim dividend increase to 8.2p.
Negative Updates
UK Primary Testing Platform Issues
Delivered the first large-scale testing cycle for U.K. primary schools (~2 million papers) but experienced technical issues with the new platform that caused a short delay in delivery of results; company apologized and is strengthening delivery for future cycles.
Read all updates
Q2-2026 Updates
Positive
Negative
Group Financial Performance
Underlying group revenue up 4% in H1; adjusted operating profit up 14% underlying to £226m; margin expanded 140 basis points to 15.5%. Adjusted EPS increased 19% at constant exchange rates (18% headline) to 28.9p. Free cash flow rose by £103m to £259m. Company executed an accelerated £350m share buyback and proposed a 5% interim dividend increase to 8.2p.
Read all positive updates
Company Guidance
Pearson said it is on track to deliver full‑year guidance after a strong H1: revenue +4%, adjusted operating profit +14% to GBP 226m, margin 15.5% (+140bps), adjusted EPS +19% (28.9p; headline +18%), and free cash flow GBP 259m (up GBP 103m); net debt was GBP 1.3bn (up GBP 0.3bn) after an accelerated GBP 350m buyback and a proposed interim dividend +5% to 8.2p. For 2026 management reiterated mid‑single‑digit group underlying revenue growth, group adjusted operating profit GBP 640–685m (FY FX), free cash conversion 90–100%, medium‑term margin expansion c.40bps, and business‑level expectations (A&Q low‑ to mid‑single digit; Virtual Learning stronger than 2025; Higher Ed >2025; ELL more uncertain).Pearson Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
63
Positive
Cash Flow
58
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.63B | 3.58B | 3.55B | 3.67B | 3.84B | 3.43B |
| Gross Profit | 1.89B | 1.72B | 1.81B | 1.83B | 1.79B | 1.68B |
| EBITDA | 1.10B | 1.13B | 1.09B | 1.07B | 930.00M | 751.00M |
| Net Income | 319.00M | 335.00M | 434.00M | 378.00M | 242.00M | 177.00M |
Balance Sheet | ||||||
| Total Assets | 6.37B | 6.46B | 6.89B | 6.73B | 7.31B | 7.34B |
| Cash, Cash Equivalents and Short-Term Investments | 339.00M | 333.00M | 543.00M | 312.00M | 543.00M | 937.00M |
| Total Debt | 1.76B | 1.48B | 1.47B | 1.16B | 1.22B | 1.40B |
| Total Liabilities | 3.01B | 2.79B | 2.84B | 2.74B | 2.89B | 3.06B |
| Stockholders Equity | 3.34B | 3.65B | 4.04B | 3.97B | 4.40B | 4.27B |
Cash Flow | ||||||
| Free Cash Flow | 785.00M | 661.00M | 503.00M | 399.00M | 214.00M | 150.00M |
| Operating Cash Flow | 826.00M | 690.00M | 627.00M | 525.00M | 361.00M | 326.00M |
| Investing Cash Flow | -302.00M | -277.00M | -131.00M | -301.00M | 13.00M | -80.00M |
| Financing Cash Flow | -549.00M | -609.00M | -241.00M | -450.00M | -804.00M | -414.00M |
Pearson Technical Analysis
Neutral
1226.00
Price Trends
1205.30
Negative
1139.61
Positive
1050.95
Positive
Market Momentum
-7.19
Positive
42.66
Neutral
18.32
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:PSON, the sentiment is Neutral. The current price of 1226 is above the 20-day moving average (MA) of 1225.10, above the 50-day MA of 1205.30, and above the 200-day MA of 1050.95, indicating a neutral trend. The MACD of -7.19 indicates Positive momentum. The RSI at 42.66 is Neutral, neither overbought nor oversold. The STOCH value of 18.32 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:PSON.
Pearson Risk Analysis
Pearson disclosed 31 risk factors in its most recent earnings report. Pearson reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Pearson Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | £530.16M | 19.73 | 12.74% | 2.67% | -9.72% | 6.73% | |
78 Outperform | £43.05B | 19.60 | 125.53% | 2.63% | 1.95% | 20.56% | |
69 Neutral | £11.30B | 53.53 | 3.90% | 2.50% | 4.51% | 216.21% | |
65 Neutral | £7.17B | 23.47 | 9.26% | 2.06% | 3.24% | -25.23% | |
64 Neutral | £281.53M | 8.88 | 3.57% | 5.72% | -8.41% | -51.11% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
53 Neutral | £169.59M | -79.61 | -6.04% | ― | -12.14% | -117.78% |
* Communication Services Sector Average
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Pearson Corporate Events
Business Operations and StrategyRegulatory Filings and Compliance
Pearson Issues New Shares to Satisfy Employee Equity Awards
Neutral
Aug 3, 2026
Pearson has issued 258,796 new ordinary shares of 25 pence each to satisfy the vesting of employee awards under its Save for Shares and Employee Stock Purchase Plans. The shares, issued between 1 July and 31 July 2026, are fungible with existing s...
Regulatory Filings and Compliance
Pearson Confirms Share Capital and Voting Rights for FCA Disclosure
Positive
Aug 3, 2026
Pearson PLC has confirmed that, as of the close of business on 31 July 2026, it has 601,399,290 ordinary shares of 25p each admitted to trading, with each share carrying one voting right at general meetings and no shares held in Treasury. The comp...
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Pearson Delivers Strong H1 2026 Results and Reaffirms Guidance as Reskilling Demand Grows
Positive
Jul 31, 2026
Pearson reported a solid first-half performance for 2026, with underlying group revenue up 4% to £1.78bn and adjusted operating profit rising 14% to £276m, expanding margins to 15.5%. Growth was led by Virtual Learning, Enterprise Learni...
Business Operations and Strategy
Pearson Executive Increases Stake via U.S. Stock Purchase Plan
Positive
Jul 17, 2026
Pearson plc disclosed that Tom ap Simon, President of Higher Education and Virtual Learning, purchased American Depositary Receipts in the company through its U.S. Employee Stock Purchase Plan for the offering period from 1 January 2026 to 30 June...
Regulatory Filings and Compliance
Pearson Updates Market on Share Capital and Voting Rights
Neutral
Jul 1, 2026
Pearson PLC has reported that, as of 30 June 2026, it has 601,140,494 ordinary shares of 25p each admitted to trading, with each share carrying one vote at general meetings and no shares held in treasury. The stated share capital figure serves as ...
Business Operations and StrategyExecutive/Board Changes
Pearson CEO Omar Abbosh Joins Autodesk Board as Non-Executive Director
Positive
Jun 18, 2026
Pearson has announced that its chief executive, Omar Abbosh, has joined the board of U.S. software company Autodesk, Inc. as a non-executive director, with the appointment effective from 17 June 2026. The move expands Abbosh’s external board...
Business Operations and StrategyRegulatory Filings and Compliance
Pearson Issues New Shares to Satisfy Employee Save for Shares Awards
Neutral
Jun 1, 2026
Pearson has issued 1,268 new ordinary shares of 25 pence each to satisfy the vesting of awards under its Save for Shares Plan granted to employees. The newly issued shares, created between 1 May and 31 May 2026, are fungible with existing stock an...
Regulatory Filings and Compliance
Pearson Confirms Share Capital and Voting Rights for Transparency Compliance
Neutral
Jun 1, 2026
Pearson PLC reported that, as of 31 May 2026, it has 601,140,494 ordinary shares of 25p each in issue, with each share carrying one vote and no shares held in treasury. The disclosed share count serves as the official denominator for investors cal...
DividendsRegulatory Filings and Compliance
Pearson Discloses ADR Purchase by Senior Executive Under Dividend Plan
Neutral
May 20, 2026
Pearson plc disclosed that Tom ap Simon, President of Higher Education and Virtual Learning, purchased American Depositary Receipts in the company through its Dividend Reinvestment Plan. The transaction involved 2,621.78 ADRs at a price of $15.196...
Business Operations and StrategyStock Buyback
Pearson Completes Second £175m Tranche of £350m Share Buyback
Positive
May 11, 2026
Pearson has repurchased 519,504 ordinary shares on the London Stock Exchange and other venues at an average price of 1,099.70 pence per share, with the shares to be cancelled, reducing its share capital. The transactions, executed by Morgan Stanle...
Executive/Board ChangesRegulatory Filings and Compliance
Pearson Executives Receive LTIP Shares, Sell Portions to Cover Tax Liabilities
Neutral
May 7, 2026
Pearson has disclosed a series of share-related transactions by several senior executives following the vesting of awards under the company’s Long-Term Incentive Plan. Presidents overseeing Higher Education and Virtual Learning, English Lang...
Business Operations and StrategyExecutive/Board Changes
Pearson Grants Share Options to English Language Learning President
Positive
May 7, 2026
Pearson plc disclosed that Sharon Hague, President of English Language Learning, has been granted 2,246 options over ordinary shares under the company’s Save for Shares Plan. The options, with an exercise price of £8.10 per share over a...
Executive/Board Changes
Pearson Grants 2026 Long-Term Incentive Award to Chief Executive
Neutral
May 7, 2026
Pearson has granted its 2026 annual long-term incentive award to Chief Executive Omar Abbosh in the form of performance-related restricted shares under its 2020 Long-Term Incentive Plan. Abbosh received 799,835 restricted shares, calculated at an ...
Business Operations and StrategyStock Buyback
Pearson Advances £350m Buyback With Fresh Share Repurchase and Cancellation
Positive
May 7, 2026
Pearson has repurchased 505,095 ordinary shares on 6 May 2026 across the London Stock Exchange and alternative trading venues at an average price of 1,131.08p, with the shares to be cancelled. The transaction forms part of the second £175 mil...
Business Operations and StrategyStock Buyback
Pearson Cancels 507,798 Shares in Ongoing £350m Buyback
Positive
May 6, 2026
Pearson plc has repurchased 507,798 ordinary shares on 5 May 2026 at an average price of 1,125.05 pence per share through Morgan Stanley on the London Stock Exchange and other European venues. The company plans to cancel these shares, effectively ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.