Pearson (PSO) AI Stock Analysis

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Pearson

(NYSE:PSO)

Select Model

Outperform 74 (OpenAI - 4o)

Rating:74Outperform

Price Target:

$16.00

▲(9.51% 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.

Pearson (PSO) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$8.28B

Dividend Yield2.28%

Average Volume (3M)753.57K

Price to Earnings (P/E)15.2

Beta (1Y)0.21

Revenue Growth1.93%

EPS Growth34.40%

CountryUS

Employees17,116

SectorCommunication Services

Sector Strength97

IndustryPublishing

Share Statistics

EPS (TTM)0.32

Shares Outstanding638,282,400

10 Day Avg. Volume770,136

30 Day Avg. Volume753,565

Financial Highlights & Ratios

PEG Ratio1.08

Price to Book (P/B)2.20

Price to Sales (P/S)2.50

P/FCF Ratio17.63

Enterprise Value/Market Cap1.40

Enterprise Value/Revenue3.30

Enterprise Value/Gross Profit6.40

Enterprise Value/Ebitda10.42

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

EPS Forecast (FY)0.84

Revenue Forecast (FY)$4.82B

Pearson Business Overview & Revenue Model

Company DescriptionPearson (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 MoneyPearson 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 Key Performance Indicators (KPIs)

Any

Revenue by Segment

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.

Chart InsightsPearson's 'Assessment & Qualifications' segment shows consistent growth, while 'Virtual Learning' faces a decline, reflecting challenges in English Language Learning and Higher Education. Despite these pressures, the earnings call highlights strategic wins with Salesforce and ServiceNow, and a promising acquisition of eDynamic Learning. The focus on AI and demographic trends is expected to drive future growth, with new contracts and product innovations bolstering confidence. The company anticipates stronger growth in the second half of 2025, aligning with its strategic goals.

Data provided by:

Main Street Data

Pearson Earnings Call Summary

Earnings Call Date:Aug 01, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Feb 27, 2026

Earnings Call Sentiment Neutral

The earnings call demonstrated a solid financial performance with strategic partnerships and growth in certain segments like Higher Education and Virtual Learning. However, challenges persist with English Language Learning and specific contract delays affecting Pearson VUE and US Student Assessment. Overall, the sentiment is balanced with both positive advancements and ongoing challenges.

Q2-2025 Updates

Positive Updates

Solid Financial Performance

Sales increased by 2% on an underlying basis, with adjusted operating profit also up 2% to GBP 242 million. Strong cash performance enabled continued investments and increased shareholder returns.

Virtual Learning Enrollment Growth

Positive enrollment trends with a 5% increase on a same-school basis and 7% including new school openings, setting a platform for accelerated growth in the medium term.

Strategic Partnerships Expansion

New strategic partnerships with Microsoft, AWS, and Google Cloud are expected to enable revenue growth and innovation opportunities. Amazon selected Pearson for workforce development learning product integration.

Higher Education Innovation

Higher Education sales grew 4%, driven by 21% growth in Inclusive Access and 3% growth in U.S. digital subscriptions, with continued AI integration in study tools.

Negative Updates

Challenges in English Language Learning

English Language Learning sales declined by 3%, impacted by a strong comparison period, with PTE business expected to decline in the second half.

VUE and US Student Assessment Declines

Declines in Pearson VUE and US Student Assessment due to paused contracts and headwinds in PDRI, although expected to improve in H2.

Higher Education Enrollment Uncertainty

Higher Education enrollments expected to remain flat, with some federal government spending delays causing superintendent purchasing hesitation.

Company Guidance

In the call, Pearson provided guidance indicating a solid first-half performance for 2025 with sales up by 2% on an underlying basis, aligning with the financial expectations set in February. Adjusted operating profit also rose by 2% to GBP 242 million. Pearson expects stronger growth in the second half of the year, driven by new and renewed contracts in Assessments & Qualifications, enrollment increases in Virtual Learning, and continued expansion into adjacent markets and Enterprise Learning & Skills. The company reiterated its medium-term guidance, emphasizing progress in strategic initiatives such as AI integration and operational improvements. The acquisition of eDynamic Learning, expected to bolster the Early Careers strategy, was highlighted as part of Pearson's growth agenda. The call also touched on the impact of foreign exchange movements, with a noted GBP 45 million reduction in adjusted operating profit due to currency fluctuations.

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

Positive

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

Positive

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

Very Positive

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	1.49B	1.47B	1.16B	1.29B	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 Price14.61

Price Trends

50DMA

14.19

Negative

100DMA

14.33

Negative

200DMA

15.12

Negative

Market Momentum

MACD

-0.25

Positive

RSI

26.32

Positive

STOCH

5.15

Positive

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 14.61 is above the 20-day moving average (MA) of 14.27, above the 50-day MA of 14.19, and below the 200-day MA of 15.12, indicating a bearish trend. The MACD of -0.25 indicates Positive momentum. The RSI at 26.32 is Positive, neither overbought nor oversold. The STOCH value of 5.15 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PSO.

Pearson Risk Analysis

Pearson disclosed 29 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

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NYT	79 Outperform	$9.96B	29.89	17.63%	1.09%	8.43%	21.38%
PSO	74 Outperform	$8.28B	15.17	11.74%	2.28%	1.93%	34.40%
WLY	63 Neutral	$1.95B	20.53	13.45%	3.87%	-8.50%	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
GCI	60 Neutral	$747.31M	9.82	44.25%	―	-8.56%	―
SCHL	58 Neutral	$696.59M	―	-1.14%	2.89%	0.97%	-197.80%
EDUC	46 Neutral	$11.67M	-2.55	-11.27%	―	-30.65%	-62.03%

* Communication Services Sector Average

Performance Comparison

PSO

Pearson

13.06

-2.23

-14.58%

EDUC

Educational Development

1.35

-0.58

-30.05%

WLY

John Wiley Sons Cl A

36.53

-14.81

-28.85%

NYT

New York Times

61.35

7.17

13.23%

SCHL

Scholastic

27.71

2.01

7.82%

GCI

Gannett

5.08

-0.57

-10.09%

Pearson Corporate Events

Pearson Reports Change in Major Shareholder Holdings

Oct 20, 2025

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.

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.Date of analysis: Oct 30, 2025