Want to see PSO full AI Analyst Report?
Top Page
Pearson
(NYSE:PSO)
Select Model
Select Model
Rating:64Neutral
Price Target:
$17.50
▲(7.43% Upside)
Action:Reiterated
Date:08/05/26
Overall score reflects solid financial quality and cash generation (strong FCF conversion) supported by a positive earnings update and reaffirmed guidance. These strengths are tempered by a higher P/E valuation, a neutral-to-moderate technical setup, and fundamental watch items including historical revenue declines and rising leverage/net debt.
Positive Factors
Free cash flow conversion
Very strong free cash flow conversion (≈96% of net income in 2025) is a durable strength. High FCF supports reinvestment in digital products, consistent dividends, and buybacks while providing a buffer versus cyclical revenue softness, enhancing long‑term financial resilience.
Negative Factors
Multi‑year revenue declines
A three‑year top‑line decline signals structural demand or market share challenges in parts of the business. Persistent revenue weakness forces reliance on margin expansion, one‑offs and capital returns to sustain EPS growth, increasing execution risk for durable growth targets.
Read all positive and negative factors
Positive Factors
Negative Factors
Free cash flow conversion
Very strong free cash flow conversion (≈96% of net income in 2025) is a durable strength. High FCF supports reinvestment in digital products, consistent dividends, and buybacks while providing a buffer versus cyclical revenue softness, enhancing long‑term financial resilience.
Read all positive factors
Pearson Key Performance Indicators (KPIs)
Any
Revenue by Segment
Analyzes revenue from different business units, highlighting which segments drive growth and profitability, and where there might be challenges or opportunities for expansion.
Analyzes revenue from different business units, highlighting which segments drive growth and profitability, and where there might be challenges or opportunities for expansion.
Data provided by:
The Fly
The FlyPearson (PSO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.14B
Dividend Yield2.02%
Average Volume (3M)769.79K
Price to Earnings (P/E)24.6
Beta (1Y)0.31
Revenue Growth7.10%
EPS Growth-22.39%
CountryUS
Employees17,116
SectorCommunication Services
Sector Strength97
IndustryPublishing
Share Statistics
EPS (TTM)0.51
Shares Outstanding598,496,030
10 Day Avg. Volume954,523
30 Day Avg. Volume769,789
Financial Highlights & Ratios
PEG Ratio-1.01
Price to Book (P/B)1.86
Price to Sales (P/S)1.90
P/FCF Ratio10.50
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$17.40Price Target Upside6.81% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)0.94
Revenue Forecast (FY)$4.98B
Pearson Business Overview & Revenue Model
Company Description
Pearson plc is a prominent international provider of educational content, evaluations, and related services. Its operations span the globe, with a significant presence in regions such as the United Kingdom, the United States, Canada, the Asia Paci...
How the Company Makes Money
Pearson makes money primarily by selling education content and delivering learning and assessment services, with an increasing emphasis on digital and subscription-like models. Key revenue streams include: (1) Higher education courseware and platf...
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 presented a broadly positive operational and financial picture: group revenue, profit, EPS and free cash flow showed clear improvement, Virtual Learning and Enterprise businesses are delivering strong growth, and management reiterated full-year guidance and medium-term margin targets. Key strategic developments—AI certification contract, product innovation and digital/operational simplification—support growth prospects. Offsetting these positives are headwinds in English Language Learning, delivery issues in the U.K. SATs cycle that incurred one-time costs, some margin pressure in Assessment & Qualifications due to contract mix, and increased net debt partly driven by buybacks and acquisitions. On balance, the positive financial performance, cash generation and strategic momentum outweigh the challenges.Positive Updates
Group Financial Performance (H1 2026)
Revenue up 4% (underlying); adjusted operating profit up 14% to GBP 226m; adjusted operating margin expanded 140 basis points to 15.5%; adjusted EPS up 19% at constant exchange rates (headline EPS 28.9p, +18%).
Negative Updates
English Language Learning (ELL) Headwinds
ELL revenue declined 3% in H1; Pearson Test of English facing declines due to softer international mobility, tighter migration policies and geopolitical disruption; management updated guidance noting ELL growth this year is less certain.
Read all updates
Q2-2026 Updates
Positive
Negative
Group Financial Performance (H1 2026)
Revenue up 4% (underlying); adjusted operating profit up 14% to GBP 226m; adjusted operating margin expanded 140 basis points to 15.5%; adjusted EPS up 19% at constant exchange rates (headline EPS 28.9p, +18%).
Read all positive updates
Company Guidance
Pearson said it is on track to deliver 2026 guidance after a solid H1: group underlying revenue +4%, adjusted operating profit +14% to GBP 226m, margin +140bps to 15.5%, adjusted EPS +19% at constant currency (headline +18%) to 28.9p, free cash flow GBP 259m (up GBP 103m), net debt GBP 1.3bn (up GBP 0.3bn), an accelerated GBP 350m share buyback completed and a 5% higher interim dividend to 8.2p. Management reiterated full‑year targets of mid‑single‑digit underlying revenue growth, group adjusted operating profit of GBP 640–685m (at prior‑year FX), free cash conversion of 90–100% and ~40bps of medium‑term margin expansion. Business‑level performance/guidance includes Assessment & Qualifications H1 +2% and expected low‑to‑mid single‑digit growth for the year; Virtual Learning H1 +19% (spring enrolment +15%) and expected to grow faster than 2025 with margin ~18%; Higher Education H1 +2% and expected to grow versus 2025 (margin ~6%); Inclusive Access Q2 +23% and now 50% of US core courseware; English Language Learning H1 -3% with updated uncertainty; and Enterprise Learning & Skills H1 +7% with margin ~28%; group growth is expected to be weighted to Q3.Pearson Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
58
Neutral
Cash Flow
72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.64B | 3.58B | 3.55B | 3.67B | 3.84B | 3.43B |
| Gross Profit | 1.89B | 1.86B | 1.81B | 1.83B | 1.79B | 1.68B |
| EBITDA | 1.11B | 1.10B | 1.11B | 1.10B | 930.00M | 751.00M |
| Net Income | 319.04M | 327.66M | 434.00M | 378.00M | 242.00M | 177.00M |
Balance Sheet | ||||||
| Total Assets | 6.33B | 6.45B | 6.89B | 6.73B | 7.31B | 7.34B |
| Cash, Cash Equivalents and Short-Term Investments | 336.95M | 332.41M | 543.00M | 312.00M | 558.00M | 937.00M |
| Total Debt | 1.75B | 1.48B | 1.47B | 1.16B | 1.24B | 1.40B |
| Total Liabilities | 3.00B | 2.79B | 2.84B | 2.74B | 2.91B | 3.06B |
| Stockholders Equity | 3.32B | 3.64B | 4.04B | 3.97B | 4.40B | 4.27B |
Cash Flow | ||||||
| Free Cash Flow | 791.02M | 646.51M | 503.00M | 399.00M | 304.00M | 150.00M |
| Operating Cash Flow | 832.56M | 674.88M | 627.00M | 525.00M | 361.00M | 326.00M |
| Investing Cash Flow | -302.73M | -270.93M | -131.00M | -301.00M | 13.00M | -80.00M |
| Financing Cash Flow | -559.62M | -595.65M | -241.00M | -450.00M | -804.00M | -414.00M |
Pearson Technical Analysis
Positive
16.29
Price Trends
15.98
Positive
14.99
Positive
14.07
Positive
Market Momentum
0.26
Positive
50.20
Neutral
43.30
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSO, the sentiment is Positive. The current price of 16.29 is below the 20-day moving average (MA) of 16.81, above the 50-day MA of 15.98, and above the 200-day MA of 14.07, indicating a neutral trend. The MACD of 0.26 indicates Positive momentum. The RSI at 50.20 is Neutral, neither overbought nor oversold. The STOCH value of 43.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PSO.
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 |
|---|---|---|---|---|---|---|---|
79 Outperform | $12.12B | 31.87 | 19.22% | 1.14% | 10.41% | 27.40% | |
75 Outperform | $2.66B | 12.37 | 28.86% | 2.87% | -0.06% | 173.86% | |
64 Neutral | $10.14B | 24.65 | 9.26% | 2.10% | 7.10% | -22.39% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
60 Neutral | $11.76M | 3.94 | 7.17% | ― | -34.31% | ― | |
50 Neutral | $766.76M | 16.59 | 6.61% | 1.85% | -2.68% | ― |
* Communication Services Sector Average
PSO
Pearson
16.55
2.45
17.39%
EDUC
Educational Development
1.39
0.07
5.30%
WLY
John Wiley Sons Cl A
54.68
18.13
49.61%
NYT
New York Times
75.61
14.38
23.49%
SCHL
Scholastic
43.51
19.23
79.22%
Pearson Corporate Events
Pearson Discloses Increased 12.02% Stake Held by Artisan Partners
Jun 29, 2026
Pearson has disclosed a change in its shareholder base after U.S.-based asset manager Artisan Partners Limited Partnership increased its stake in the company, crossing a regulatory threshold on 24 June 2026. Artisan now controls 72,267,456 voting ...
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.