Pearson (PSO) AI Stock Analysis

• Market Cap: $7.85B
• Dividend Yield: 2.11%
• Average Volume (3M): 1.19M
• Price to Earnings (P/E): 14.6
• Beta (1Y): 0.26
• 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: 631,977,500
• 10 Day Avg. Volume: 1,020,380
• 30 Day Avg. Volume: 1,185,753
• 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: 0.89
• Enterprise Value/Revenue: 1.99
• Enterprise Value/Gross Profit: 3.87
• Enterprise Value/Ebitda: 6.30
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: $14.00 ▲(7.36% Upside)
• Action: Reiterated Date: 10/30/25
• Date: Action: Reiterated 10/30/25

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 plc provides educational courseware, assessments, and services in the United Kingdom, the United States, Canada, the Asia Pacific, other European countries, and internationally. It operates through five segments: Assessment & Qualifications, Virtual Learning, English Language Learning, Higher Education, and Workforce Skills. The Assessment & Qualifications segment offers Pearson VUE, US student assessment, clinical assessment, UK GCSE, and A levels and international academic qualifications. The Virtual Learning segment provides virtual schools and online program management services. The English Language Learning segment offers Pearson test of English, institutional courseware, and English online solutions. The Higher Education segment provides the US, Canadian, and international higher education courseware businesses. The Workforce Skills offers BTEC, GED, TalentLens, Faethm, Pearson college, and apprenticeships. Pearson plc was founded in 1844 and is headquartered in London, the United Kingdom.

How the Company Makes Money

Pearson generates revenue through multiple streams, primarily from the sale of educational materials and services. Key revenue sources include the sale of print and digital textbooks, e-learning platforms, and subscription-based services for online courses. Additionally, Pearson earns revenue from assessment and testing services, which are utilized by educational institutions and governments. The company has established significant partnerships with universities, colleges, and other educational organizations, allowing it to expand its reach and enhance its offerings. Furthermore, Pearson's investments in technology and digital learning solutions position it to capitalize on the growing trend of online education, contributing to its overall 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: Negative

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 above the 20-day moving average (MA) of 12.63, below the 50-day MA of 13.32, and below the 200-day MA of 14.14, indicating a bearish trend. The MACD of -0.22 indicates Negative momentum. The RSI at 46.12 is Neutral, neither overbought nor oversold. The STOCH value of 80.56 is Negative, 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	78 Outperform	$12.26B	36.12	―	0.95%	8.43%	21.38%
PSO	74 Outperform	$7.85B	14.63	11.74%	2.11%	1.93%	34.40%
WLY	69 Neutral	$1.56B	15.73	13.61%	4.48%	-5.33%	―
SCHL	65 Neutral	$829.91M	―	-0.35%	2.78%	2.53%	-23.86%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
EDUC	58 Neutral	$11.92M	2.89	-11.27%	―	-30.65%	-62.03%

Pearson Corporate Events

Cevian Capital Lifts Pearson Stake Above 15% in January 2026

On 14 January 2026, activist investor Cevian Capital II GP Limited increased its stake in Pearson plc, crossing a UK disclosure threshold as its indirect voting interest rose from 14.17% to 15.26%, equivalent to 97,043,459 voting rights, with the holding legally registered under Aurora Nominees Limited on behalf of UBS AG as custodian. The move, formally notified to Pearson on 16 January 2026 and completed in Jersey, further consolidates Cevian’s position as a major shareholder in the education group, potentially giving it greater influence over corporate governance, strategy and capital allocation, and underscoring continued investor scrutiny of Pearson’s performance and transformation efforts.

The most recent analyst rating on (PSO) stock is a Buy with a $14.00 price target. To see the full list of analyst forecasts on Pearson stock, see the PSO Stock Forecast page.

Pearson Updates Block Listing for Employee Share Schemes

On 16 January 2026, Pearson plc filed a block listing return covering activity between 1 December 2025 and 15 January 2026 for two of its employee share schemes, providing an update on the use of previously authorised share capital. Under its Save for Shares Plan, the company allotted 41,942 shares during the period, reducing the balance of unallotted securities under that scheme from 1,482,109 to 1,440,167, while no shares were issued under the Employee Stock Purchase Plan, leaving its unallotted balance unchanged at 2,228,992 shares. The disclosures indicate modest utilisation of shares for employee incentives without any increase in the size of the underlying block listings, suggesting Pearson is continuing to support staff participation in equity schemes within existing shareholder authorisations rather than expanding its potential dilution.

The most recent analyst rating on (PSO) stock is a Hold with a $15.50 price target. To see the full list of analyst forecasts on Pearson stock, see the PSO Stock Forecast page.