Pearson (PSO) AI Stock Analysis

• Market Cap: $8.33B
• Dividend Yield: 2.28%
• Average Volume (3M): 711.95K
• Price to Earnings (P/E): 15.2
• Beta (1Y): 0.22
• Revenue Growth: 1.93%
• EPS Growth: 34.40%
• Country: US
• Employees: 17,116
• Sector: Communication Services
• Sector Strength: 97
• Industry: Publishing
• EPS (TTM): 0.32
• Shares Outstanding: 637,072,100
• 10 Day Avg. Volume: 744,600
• 30 Day Avg. Volume: 711,952
• PEG Ratio: 1.08
• Price to Book (P/B): 2.20
• Price to Sales (P/S): 2.50
• P/FCF Ratio: 17.63
• Enterprise Value/Market Cap: 1.39
• Enterprise Value/Revenue: 3.30
• Enterprise Value/Gross Profit: 6.40
• Enterprise Value/Ebitda: 10.42
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 0.84
• Revenue Forecast (FY): $4.80B

• Rating: 74 Outperform
• Price Target: $16.00 ▲(22.70% Upside)

Pearson's overall stock score reflects strong financial performance and positive earnings call sentiment, supported by strategic partnerships and growth in key segments. However, technical indicators suggest caution, and valuation metrics are moderate. Continued focus on overcoming challenges in specific areas will be crucial for future growth.

Positive Factors

Strategic Partnerships

These partnerships are expected to drive revenue growth and innovation, enhancing Pearson's competitive position in digital learning solutions.

Cash Flow Management

Strong cash flow management allows Pearson to invest in growth opportunities and return value to shareholders, supporting long-term financial health.

Virtual Learning Growth

Growth in virtual learning enrollment positions Pearson to capitalize on the expanding digital education market, driving future revenue.

Negative Factors

Revenue Growth Inconsistency

Inconsistent revenue growth can hinder long-term strategic planning and investment, posing challenges to sustained business expansion.

Challenges in English Language Learning

Declines in this segment may affect Pearson's ability to capitalize on global demand for English language education, impacting overall growth.

Higher Education Enrollment Uncertainty

Flat enrollments and spending delays could limit growth in the Higher Education segment, affecting Pearson's revenue potential in this key area.

Pearson Business Overview & Revenue Model

Company Description

Pearson (PSO) is a global education company that specializes in providing educational materials, technologies, assessments, and services. The company operates primarily in the educational publishing sector, offering a wide range of products including textbooks, digital learning platforms, and assessment tools for students and educators. Pearson is focused on enhancing learning experiences through innovative solutions that cater to various educational levels, from early childhood to higher education, and vocational training.

How the Company Makes Money

Pearson generates revenue through multiple streams, including the sale of educational materials such as textbooks and digital resources, subscription services for its online learning platforms, and fees for assessments and certifications. A significant portion of its income comes from licensing educational content to institutions and companies. Additionally, Pearson has formed partnerships with educational institutions and technology companies to enhance its product offerings and reach a broader audience. These collaborations often involve shared revenue models that further contribute to its earnings.

Pearson Financial Statement Overview

Summary

Pearson demonstrates consistent profitability with a strong balance sheet and impressive cash flow management. Despite some fluctuations in revenue growth, the company shows robust operational efficiency and a solid capital structure, positioning it well within the traditional media industry.

Income Statement

Pearson exhibits moderate profitability with a consistent gross profit margin around 51% over recent years, indicating stable cost management. The net profit margin improved from 9.7% in 2020 to 12.2% in 2024, showcasing enhanced efficiency. However, revenue growth has been inconsistent, with a 5% decline in 2024 compared to 2023. EBIT and EBITDA margins have shown resilience, reflecting operational strength.

Balance Sheet

The balance sheet reveals a steady financial position with a debt-to-equity ratio of approximately 0.36, indicating manageable leverage. ROE improved from 5.8% in 2020 to 10.7% in 2024, driven by increased profitability. The equity ratio remains strong at 58.6%, reflecting a solid capital structure. However, the slight decline in total assets and stockholders' equity warrants attention.

Cash Flow

Pearson demonstrates robust cash flow management, with a significant increase in free cash flow from $255M in 2020 to $503M in 2024, reflecting effective cost control and investment strategies. The operating cash flow to net income ratio shows strong conversion, with a ratio of 1.44 in 2024, indicating healthy cash generation relative to earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.52B	3.55B	3.67B	3.84B	3.43B	3.40B
Gross Profit	1.81B	1.81B	1.83B	1.79B	1.68B	1.63B
EBITDA	1.11B	1.11B	1.10B	930.00M	751.00M	1.01B
Net Income	441.00M	434.00M	378.00M	242.00M	177.00M	330.00M
Balance Sheet
Total Assets	6.22B	6.89B	6.73B	7.31B	7.34B	7.45B
Cash, Cash Equivalents and Short-Term Investments	347.00M	543.00M	312.00M	558.00M	937.00M	1.10B
Total Debt	1.50B	1.47B	1.16B	1.24B	1.40B	1.65B
Total Liabilities	2.62B	2.84B	2.74B	2.91B	3.06B	3.32B
Stockholders Equity	3.59B	4.04B	3.97B	4.40B	4.27B	4.13B
Cash Flow
Free Cash Flow	624.00M	503.00M	399.00M	304.00M	150.00M	255.00M
Operating Cash Flow	744.00M	627.00M	525.00M	361.00M	326.00M	389.00M
Investing Cash Flow	-74.00M	-131.00M	-301.00M	13.00M	-80.00M	591.00M
Financing Cash Flow	-606.00M	-241.00M	-450.00M	-804.00M	-414.00M	-299.00M

Pearson Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 13.04
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSO, the sentiment is Negative. The current price of 13.04 is below the 20-day moving average (MA) of 13.21, below the 50-day MA of 13.87, and below the 200-day MA of 14.89, indicating a bearish trend. The MACD of -0.26 indicates Negative momentum. The RSI at 39.30 is Neutral, neither overbought nor oversold. The STOCH value of 56.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PSO.

Pearson Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NYT	79 Outperform	$10.52B	31.56	17.63%	1.05%	8.43%	21.38%
PSO	74 Outperform	$8.33B	15.22	11.74%	2.28%	1.93%	34.40%
WLY	62 Neutral	$1.93B	20.36	13.45%	3.91%	-8.50%	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
SCHL	58 Neutral	$746.87M	―	-1.14%	2.69%	0.97%	-197.80%
GCI	58 Neutral	―	―	44.25%	―	-8.56%	―
EDUC	44 Neutral	$11.07M	―	-11.27%	―	-30.65%	-62.03%

Pearson Corporate Events

Pearson Reports Change in Major Shareholder Holdings

On October 16, 2025, Pearson plc reported a change in its major holdings due to an acquisition or disposal of voting rights by Ameriprise Financial, Inc. The transaction resulted in Ameriprise holding 4.997% of Pearson’s voting rights, a slight decrease from their previous position of 5.114%. This change in holdings could impact Pearson’s shareholder structure and influence future corporate decisions.