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Pearson PLC (PSO)
:PSO
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Pearson
(NYSE:PSO)
Rating:74Outperform
Price Target:
$16.00
▲(9.97% Upside)
Pearson (PSO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.24B
Dividend Yield2.05%
Average Volume (3M)702.10K
Price to Earnings (P/E)16.9
Beta (1Y)0.23
Revenue Growth1.93%
EPS Growth34.40%
CountryUS
Employees17,116
SectorCommunication Services
Sector Strength90
IndustryPublishing
Share Statistics
EPS (TTM)0.32
Shares Outstanding647,563,200
10 Day Avg. Volume900,763
30 Day Avg. Volume702,096
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 Cap1.26
Enterprise Value/Revenue3.27
Enterprise Value/Gross Profit6.40
Enterprise Value/Ebitda10.40
Forecast
1Y Price Target
$16.00Price Target Upside9.97% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
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
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:
Main Street Data
Main Street DataPearson Earnings Call Summary
Earnings Call Date:Aug 01, 2025
(Q2-2025)
| % Change Since: 2.25%|
Next Earnings Date:Feb 27, 2026
Earnings Call Sentiment Positive
Pearson's earnings call presented a mixed but slightly positive outlook. Despite some challenges in specific segments such as PDRI and English Language Learning, the company demonstrated solid revenue growth and strategic progress with new contract wins and innovative product developments. The acquisition of eDynamic Learning and positive enrollment trends in Virtual Learning further bolster the positive sentiment.Q2-2025 Updates
Positive Updates
Solid Revenue Growth
Sales increased by 2% on an underlying basis, in line with guidance, and adjusted operating profit also rose by 2% to GBP 242 million.
Strategic Contract Wins
Pearson secured new contracts with major corporations like Salesforce, ServiceNow, and Google Cloud, expected to drive future growth.
Innovative Product Developments
Pearson introduced new AI-enhanced study tools and launched the Pearson Skilling Suite, aimed at improving learning outcomes and operational efficiencies.
Successful Acquisition
The acquisition of eDynamic Learning for $225 million is expected to enhance Pearson's Early Careers strategy with strong growth and margins.
Positive Enrollment Trends
Virtual Learning enrollments increased by 5% for the 2024-'25 academic year, with new schools opening by year-end.
Negative Updates
Pressure on PDRI
PDRI faces near-term pressure due to federal hiring freezes, which are expected to continue into the second half of the year.
Decline in English Language Learning
English Language Learning sales declined by 3%, with the PTE business expected to decline in H2.
Higher Education Challenges
Higher Education margins were impacted by sales phasing, and there were delays in federal government spending affecting the College and Career Readiness programs.
FX Headwinds
Adjusted earnings per share were impacted by FX headwinds, despite a positive underlying trading performance.
Company Guidance
In the recent call, Pearson provided a comprehensive overview of their strategic and operational guidance for the remainder of 2025. The company remains committed to their unchanged strategy, which is now deeply integrated across the organization, focusing on leveraging demographic trends and AI to shape the future of learning. Pearson is on track to meet its full-year financial performance targets, aligned with the expectations set in February, with phasing progressing as anticipated. They reported a 2% increase in sales in the first half and expect stronger growth in the second half, driven by new and renewed contracts, including with Salesforce and ServiceNow, and growth in areas such as Virtual Learning and Enterprise Learning & Skills. Adjusted operating profit for the first half was up 2% to GBP 242 million, with a 5% increase in the interim dividend. The company highlighted the significance of AI in both enhancing customer-facing products and driving internal efficiencies, such as reducing translation times and improving customer service operations. Additionally, Pearson's acquisition of eDynamic Learning, a leader in career and technical education, is expected to bolster their Early Careers strategy and contribute to medium-term growth. Overall, Pearson reiterated confidence in their medium-term trajectory, driven by strategic clarity and focused execution.Pearson Financial Statement Overview
Summary
Pearson exhibits consistent profitability and robust cash flow management, with improved net profit margins and strong operating cash flow. However, inconsistent revenue growth and slight declines in total assets and stockholders' equity warrant attention.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.78
Positive
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.75
Positive
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.82
Very Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.55B | 3.67B | 3.84B | 3.43B | 3.40B |
| Gross Profit | 1.81B | 1.83B | 1.79B | 1.68B | 1.63B |
| EBITDA | 1.11B | 1.10B | 930.00M | 751.00M | 1.01B |
| Net Income | 434.00M | 378.00M | 242.00M | 177.00M | 330.00M |
Balance Sheet | |||||
| Total Assets | 6.89B | 6.73B | 7.31B | 7.34B | 7.45B |
| Cash, Cash Equivalents and Short-Term Investments | 543.00M | 312.00M | 558.00M | 937.00M | 1.10B |
| Total Debt | 1.47B | 1.16B | 1.29B | 1.40B | 1.65B |
| Total Liabilities | 2.84B | 2.74B | 2.89B | 3.06B | 3.32B |
| Stockholders Equity | 4.04B | 3.97B | 4.40B | 4.27B | 4.13B |
Cash Flow | |||||
| Free Cash Flow | 503.00M | 399.00M | 304.00M | 150.00M | 255.00M |
| Operating Cash Flow | 627.00M | 525.00M | 361.00M | 326.00M | 389.00M |
| Investing Cash Flow | -131.00M | -301.00M | 13.00M | -80.00M | 591.00M |
| Financing Cash Flow | -241.00M | -450.00M | -804.00M | -414.00M | -299.00M |
Pearson Technical Analysis
Negative
14.55
Price Trends
14.58
Negative
15.24
Negative
15.52
Negative
Market Momentum
-0.02
Negative
49.21
Neutral
27.94
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 14.55 is above the 20-day moving average (MA) of 14.43, below the 50-day MA of 14.58, and below the 200-day MA of 15.52, indicating a neutral trend. The MACD of -0.02 indicates Negative momentum. The RSI at 49.21 is Neutral, neither overbought nor oversold. The STOCH value of 27.94 is Neutral, 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 |
|---|---|---|---|---|---|---|---|
75 Outperform | $87.76B | 35.56 | 70.68% | 1.72% | 5.32% | 6.06% | |
74 Outperform | $9.24B | 16.90 | 11.74% | 2.05% | 1.93% | 34.40% | |
73 Outperform | $9.79B | 30.96 | 17.13% | 1.03% | 7.82% | 19.39% | |
71 Outperform | $17.12B | 35.40 | 5.69% | 0.67% | -11.42% | 75.42% | |
68 Neutral | $2.11B | 25.68 | 11.28% | 3.50% | -10.43% | ― | |
66 Neutral | $653.55M | 37.85 | -0.19% | 3.04% | 2.25% | -103.50% | |
60 Neutral | $44.01B | 1.91 | -11.93% | 4.00% | 2.46% | -39.70% |
* Communication Services Sector Average
Performance Comparison
PSO
Pearson
14.55
1.27
9.56%
WLY
John Wiley Sons Cl A
39.41
-4.98
-11.22%
NYT
New York Times
60.13
6.48
12.08%
NWSA
News Corp
29.80
2.61
9.60%
SCHL
Scholastic
26.09
-3.76
-12.60%
RELX
Relx
47.69
2.86
6.38%
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.