(PSO) Pearson - Overview
Stock: Courseware, Assessments, Certifications, Online Learning, Publishing
Dividends
| Dividend Yield | 1.97% |
| Yield on Cost 5y | 3.39% |
| Yield CAGR 5y | 1.84% |
| Payout Consistency | 94.3% |
| Payout Ratio | 119.2% |
| Risk 5d forecast | |
|---|---|
| Volatility | 24.3% |
| Relative Tail Risk | -7.71% |
| Reward TTM | |
|---|---|
| Sharpe Ratio | -1.11 |
| Alpha | -35.48 |
| Character TTM | |
|---|---|
| Beta | 0.410 |
| Beta Downside | 0.337 |
| Drawdowns 3y | |
|---|---|
| Max DD | 30.73% |
| CAGR/Max DD | 0.24 |
Description: PSO Pearson January 06, 2026
Pearson plc (NYSE: PSO) is a UK-based education-technology and publishing group that operates globally across the United Kingdom, United States, Canada, Asia-Pacific, and other European markets. Founded in 1844, the firm now generates the majority of its revenue from digital learning solutions rather than traditional print, reflecting a strategic shift toward higher-margin, recurring-revenue models.
The business is organized into five reporting segments: (1) Assessment & Qualifications – includes Pearson VUE testing centers, UK GCSE/A-Level exams, and US K-12 assessments; (2) Virtual Learning – delivers online school platforms and program-management services; (3) English Language Learning – offers the Pearson Test of English (PTE) and institutional language-learning content; (4) Workforce Skills – provides BTEC, GED, talent-assessment tools (TalentLens, Faethm) and digital credentialing (Credly); and (5) Higher Education – supplies courseware and digital platforms to universities in North America and internationally.
Recent financial snapshots (FY 2023) show revenue of ≈ £5.0 bn, a 3 % YoY decline driven largely by lower print sales, but digital revenue grew ≈ 8 % to £2.1 bn, lifting the overall operating margin to 12 % (up from 10 % in FY 2022). The company’s free-cash-flow conversion improved to 45 % of earnings, and the dividend yield sits near 2.5 % on a share price of roughly $15. These metrics suggest that while legacy segments are contracting, the digital pivot is delivering measurable cash generation.
Key macro drivers for Pearson include (a) government education spending, which in the OECD averages 5 % of GDP and can swing earnings by ±1 % of revenue; (b) the accelerating adoption of AI-enabled tutoring and assessment tools, projected to increase the digital learning market size by 10 % CAGR through 2028; and (c) regulatory risk around high-stakes testing, where tighter standards or test-security breaches could materially affect the Assessment & Qualifications segment. Conversely, a rapid shift to competency-based credentials could erode demand for traditional qualifications, a risk that would require a re-allocation of resources toward micro-credentialing platforms.
For a deeper, data-driven view of Pearson’s valuation dynamics and scenario analysis, you may find the free research tools on ValueRay useful.
Piotroski VR‑10 (Strict, 0-10) 6.5
| Net Income: 676.5m TTM > 0 and > 6% of Revenue |
| FCF/TA: 0.11 > 0.02 and ΔFCF/TA -3.85 > 1.0 |
| NWC/Revenue: 21.61% < 20% (prev 15.50%; Δ 6.10% < -1%) |
| CFO/TA 0.14 > 3% & CFO 856.5m > Net Income 676.5m |
| Net Debt (1.15b) to EBITDA (1.56b): 0.74 < 3 |
| Current Ratio: 2.31 > 1.5 & < 3 |
| Outstanding Shares: last quarter (670.7m) vs 12m ago -6.28% < -2% |
| Gross Margin: 50.88% > 18% (prev 0.49%; Δ 5039 % > 0.5%) |
| Asset Turnover: 94.98% > 50% (prev 98.48%; Δ -3.49% > 0%) |
| Interest Coverage Ratio: 5.51 > 6 (EBITDA TTM 1.56b / Interest Expense TTM 173.0m) |
Altman Z'' 3.12
| A: 0.21 (Total Current Assets 2.34b - Total Current Liabilities 1.01b) / Total Assets 6.22b |
| B: 0.11 (Retained Earnings 658.0m / Total Assets 6.22b) |
| C: 0.15 (EBIT TTM 953.0m / Avg Total Assets 6.48b) |
| D: 0.37 (Book Value of Equity 959.0m / Total Liabilities 2.62b) |
| Altman-Z'' Score: 3.12 = A |
Beneish M -2.91
| DSRI: 1.29 (Receivables 999.0m/831.0m, Revenue 6.15b/6.62b) |
| GMI: 0.97 (GM 50.88% / 49.26%) |
| AQI: 0.97 (AQ_t 0.59 / AQ_t-1 0.61) |
| SGI: 0.93 (Revenue 6.15b / 6.62b) |
| TATA: -0.03 (NI 676.5m - CFO 856.5m) / TA 6.22b) |
| Beneish M-Score: -2.91 (Cap -4..+1) = A |
What is the price of PSO shares?
Over the past week, the price has changed by -6.84%, over one month by -13.42%, over three months by -6.41% and over the past year by -24.11%.
Is PSO a buy, sell or hold?
- StrongBuy: 0
- Buy: 0
- Hold: 1
- Sell: 0
- StrongSell: 0
What are the forecasts/targets for the PSO price?
| Issuer | Target | Up/Down from current |
|---|---|---|
| Wallstreet Target Price | 14.4 | 17% |
| Analysts Target Price | 14.4 | 17% |
| ValueRay Target Price | 12.6 | 3.1% |
PSO Fundamental Data Overview February 03, 2026
P/E Trailing = 14.6222
P/E Forward = 15.3846
P/S = 2.3715
P/B = 1.6802
P/EG = 3.5758
Revenue TTM = 6.15b GBP
EBIT TTM = 953.0m GBP
EBITDA TTM = 1.56b GBP
Long Term Debt = 1.01b GBP (from longTermDebt, last quarter)
Short Term Debt = 73.0m GBP (from shortTermDebt, last quarter)
Debt = 1.50b GBP (from shortLongTermDebtTotal, last quarter)
Net Debt = 1.15b GBP (from netDebt column, last quarter)
Enterprise Value = 7.27b GBP (6.12b + Debt 1.50b - CCE 347.0m)
Interest Coverage Ratio = 5.51 (Ebit TTM 953.0m / Interest Expense TTM 173.0m)
EV/FCF = 10.24x (Enterprise Value 7.27b / FCF TTM 709.5m)
FCF Yield = 9.76% (FCF TTM 709.5m / Enterprise Value 7.27b)
FCF Margin = 11.53% (FCF TTM 709.5m / Revenue TTM 6.15b)
Net Margin = 11.00% (Net Income TTM 676.5m / Revenue TTM 6.15b)
Gross Margin = 50.88% ((Revenue TTM 6.15b - Cost of Revenue TTM 3.02b) / Revenue TTM)
Gross Margin QoQ = 51.05% (prev 51.84%)
Tobins Q-Ratio = 1.17 (Enterprise Value 7.27b / Total Assets 6.22b)
Interest Expense / Debt = 1.60% (Interest Expense 24.0m / Debt 1.50b)
Taxrate = 23.85% (52.0m / 218.0m)
NOPAT = 725.7m (EBIT 953.0m * (1 - 23.85%))
Current Ratio = 2.31 (Total Current Assets 2.34b / Total Current Liabilities 1.01b)
Debt / Equity = 0.42 (Debt 1.50b / totalStockholderEquity, last quarter 3.59b)
Debt / EBITDA = 0.74 (Net Debt 1.15b / EBITDA 1.56b)
Debt / FCF = 1.62 (Net Debt 1.15b / FCF TTM 709.5m)
Total Stockholder Equity = 3.80b (last 4 quarters mean from totalStockholderEquity)
RoA = 10.45% (Net Income 676.5m / Total Assets 6.22b)
RoE = 17.78% (Net Income TTM 676.5m / Total Stockholder Equity 3.80b)
RoCE = 19.81% (EBIT 953.0m / Capital Employed (Equity 3.80b + L.T.Debt 1.01b))
RoIC = 15.04% (NOPAT 725.7m / Invested Capital 4.83b)
WACC = 6.21% (E(6.12b)/V(7.62b) * Re(7.43%) + D(1.50b)/V(7.62b) * Rd(1.60%) * (1-Tc(0.24)))
Discount Rate = 7.43% (= CAPM, Blume Beta Adj.) -> floored to rf + 0.7*ERP = 7.95%
Shares Correlation 3-Years: -100.0 | Cagr: -3.19%
[DCF Debug] Terminal Value 87.34% ; FCFF base≈836.1m ; Y1≈1.03b ; Y5≈1.76b
Fair Price DCF = 71.28 (EV 46.30b - Net Debt 1.15b = Equity 45.15b / Shares 633.4m; r=6.21% [WACC]; 5y FCF grow 25.0% → 2.90% )
EPS Correlation: -51.20 | EPS CAGR: -93.35% | SUE: 0.03 | # QB: 0
Revenue Correlation: 0.71 | Revenue CAGR: -3.31% | SUE: N/A | # QB: 0
EPS next Year (2026-12-31): EPS=0.93 | Chg30d=+0.021 | Revisions Net=-1 | Growth EPS=+10.6% | Growth Revenue=+4.5%