PEARSON PLC (PES.DE) Stock Fundamental Analysis
FRA:PES - Deutsche Boerse Ag - GB0006776081 - Common Stock - Currency: EUR
We assign a fundamental rating of 7 out of 10 to PES. PES was compared to 3 industry peers in the Diversified Consumer Services industry. PES scores excellent points on both the profitability and health parts. This is a solid base for a good stock. PES has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
PES had positive earnings in the past year.
PES had a positive operating cash flow in the past year.
Each year in the past 5 years PES has been profitable.
PES had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
PES has a Return On Assets of 6.30%. This is amongst the best in the industry. PES outperforms 100.00% of its industry peers.
The Return On Equity of PES (10.75%) is better than 100.00% of its industry peers.
PES has a better Return On Invested Capital (8.19%) than 100.00% of its industry peers.
PES had an Average Return On Invested Capital over the past 3 years of 6.70%. This is in line with the industry average of 8.19%.
The 3 year average ROIC (6.70%) for PES is below the current ROIC(8.19%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.3% | ||
| ROE | 10.75% | ||
| ROIC | 8.19% |
ROA(3y)5.07%
ROA(5y)4.41%
ROE(3y)8.59%
ROE(5y)7.58%
ROIC(3y)6.7%
ROIC(5y)5.84%
1.3 Margins
PES has a Profit Margin of 12.22%. This is amongst the best in the industry. PES outperforms 100.00% of its industry peers.
In the last couple of years the Profit Margin of PES has grown nicely.
PES's Operating Margin of 15.37% is amongst the best of the industry. PES outperforms 100.00% of its industry peers.
PES's Operating Margin has improved in the last couple of years.
PES has a better Gross Margin (50.99%) than 66.67% of its industry peers.
In the last couple of years the Gross Margin of PES has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.37% | ||
| PM (TTM) | 12.22% | ||
| GM | 50.99% |
OM growth 3Y25.2%
OM growth 5Y6.89%
PM growth 3Y33.26%
PM growth 5Y12.36%
GM growth 3Y1.31%
GM growth 5Y-0.38%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so PES is destroying value.
PES has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, PES has less shares outstanding
Compared to 1 year ago, PES has a worse debt to assets ratio.
2.2 Solvency
PES has an Altman-Z score of 2.67. This is not the best score and indicates that PES is in the grey zone with still only limited risk for bankruptcy at the moment.
PES has a better Altman-Z score (2.67) than 100.00% of its industry peers.
PES has a debt to FCF ratio of 2.93. This is a good value and a sign of high solvency as PES would need 2.93 years to pay back of all of its debts.
PES has a Debt to FCF ratio of 2.93. This is amongst the best in the industry. PES outperforms 100.00% of its industry peers.
PES has a Debt/Equity ratio of 0.29. This is a healthy value indicating a solid balance between debt and equity.
PES has a better Debt to Equity ratio (0.29) than 100.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.29 | ||
| Debt/FCF | 2.93 | ||
| Altman-Z | 2.67 |
ROIC/WACC0.93
WACC8.85%
2.3 Liquidity
A Current Ratio of 1.85 indicates that PES should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.85, PES is in the better half of the industry, outperforming 66.67% of the companies in the same industry.
A Quick Ratio of 1.80 indicates that PES should not have too much problems paying its short term obligations.
PES has a Quick ratio of 1.80. This is in the better half of the industry: PES outperforms 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.85 | ||
| Quick Ratio | 1.8 |
3. Growth
3.1 Past
PES shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 5.89%.
The Earnings Per Share has been growing slightly by 1.15% on average over the past years.
The Revenue has decreased by -3.32% in the past year.
The Revenue has been decreasing by -1.70% on average over the past years.
EPS 1Y (TTM)5.89%
EPS 3Y20.87%
EPS 5Y1.15%
EPS Q2Q%10.25%
Revenue 1Y (TTM)-3.32%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%0.17%
3.2 Future
The Earnings Per Share is expected to grow by 9.68% on average over the next years. This is quite good.
PES is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.20% yearly.
EPS Next Y9.54%
EPS Next 2Y9.77%
EPS Next 3Y9.68%
EPS Next 5YN/A
Revenue Next Year1.13%
Revenue Next 2Y2.52%
Revenue Next 3Y3.2%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
PES is valuated rather expensively with a Price/Earnings ratio of 17.80.
Based on the Price/Earnings ratio, PES is valued cheaply inside the industry as 100.00% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 27.30, PES is valued a bit cheaper.
With a Price/Forward Earnings ratio of 16.29, PES is valued correctly.
PES's Price/Forward Earnings ratio is rather cheap when compared to the industry. PES is cheaper than 100.00% of the companies in the same industry.
PES's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.76.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.8 | ||
| Fwd PE | 16.29 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of PES indicates a rather cheap valuation: PES is cheaper than 100.00% of the companies listed in the same industry.
PES's Price/Free Cash Flow ratio is rather cheap when compared to the industry. PES is cheaper than 100.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.15 | ||
| EV/EBITDA | 10.3 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of PES may justify a higher PE ratio.
PEG (NY)1.87
PEG (5Y)15.46
EPS Next 2Y9.77%
EPS Next 3Y9.68%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.23%, PES has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.23, PES pays a better dividend. On top of this PES pays more dividend than 100.00% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.37, PES has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.23% |
5.2 History
The dividend of PES has a limited annual growth rate of 4.00%.
Dividend Growth(5Y)4%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
PES pays out 35.94% of its income as dividend. This is a sustainable payout ratio.
The dividend of PES is growing, but earnings are growing more, so the dividend growth is sustainable.
DP35.94%
EPS Next 2Y9.77%
EPS Next 3Y9.68%
FRA:PES (7/3/2025, 7:00:00 PM)
12.64
+0.18 (+1.44%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners76.58%
Inst Owner ChangeN/A
Ins Owners0.19%
Ins Owner ChangeN/A
Market Cap8.25B
Analysts67.14
Price Target15.42 (21.99%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.23% |
Yearly Dividend0.27
Dividend Growth(5Y)4%
DP35.94%
Div Incr Years4
Div Non Decr Years4
Ex-DateN/A
Surprises & Revisions
EPS beat(2)N/A
Avg EPS beat(2)N/A
Min EPS beat(2)N/A
Max EPS beat(2)N/A
EPS beat(4)N/A
Avg EPS beat(4)N/A
Min EPS beat(4)N/A
Max EPS beat(4)N/A
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)N/A
Avg Revenue beat(2)N/A
Min Revenue beat(2)N/A
Max Revenue beat(2)N/A
Revenue beat(4)N/A
Avg Revenue beat(4)N/A
Min Revenue beat(4)N/A
Max Revenue beat(4)N/A
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)-2.94%
PT rev (3m)-6.63%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)0%
EPS NY rev (3m)-1.93%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0%
Revenue NY rev (3m)-3.94%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.8 | ||
| Fwd PE | 16.29 | ||
| P/S | 2 | ||
| P/FCF | 14.15 | ||
| P/OCF | 11.35 | ||
| P/B | 1.76 | ||
| P/tB | 7.03 | ||
| EV/EBITDA | 10.3 |
EPS(TTM)0.71
EY5.62%
EPS(NY)0.78
Fwd EY6.14%
FCF(TTM)0.89
FCFY7.07%
OCF(TTM)1.11
OCFY8.81%
SpS6.31
BVpS7.17
TBVpS1.8
PEG (NY)1.87
PEG (5Y)15.46
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.3% | ||
| ROE | 10.75% | ||
| ROCE | 10.09% | ||
| ROIC | 8.19% | ||
| ROICexc | 9.1% | ||
| ROICexgc | 24.03% | ||
| OM | 15.37% | ||
| PM (TTM) | 12.22% | ||
| GM | 50.99% | ||
| FCFM | 14.16% |
ROA(3y)5.07%
ROA(5y)4.41%
ROE(3y)8.59%
ROE(5y)7.58%
ROIC(3y)6.7%
ROIC(5y)5.84%
ROICexc(3y)7.48%
ROICexc(5y)7.31%
ROICexgc(3y)20.27%
ROICexgc(5y)22.68%
ROCE(3y)8.26%
ROCE(5y)7.2%
ROICexcg growth 3Y7.27%
ROICexcg growth 5Y10.63%
ROICexc growth 3Y17.53%
ROICexc growth 5Y6.81%
OM growth 3Y25.2%
OM growth 5Y6.89%
PM growth 3Y33.26%
PM growth 5Y12.36%
GM growth 3Y1.31%
GM growth 5Y-0.38%
F-Score7
Asset Turnover0.52
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.29 | ||
| Debt/FCF | 2.93 | ||
| Debt/EBITDA | 1.48 | ||
| Cap/Depr | 52.77% | ||
| Cap/Sales | 3.49% | ||
| Interest Coverage | 8.4 | ||
| Cash Conversion | 80.28% | ||
| Profit Quality | 115.9% | ||
| Current Ratio | 1.85 | ||
| Quick Ratio | 1.8 | ||
| Altman-Z | 2.67 |
F-Score7
WACC8.85%
ROIC/WACC0.93
Cap/Depr(3y)49.36%
Cap/Depr(5y)46.7%
Cap/Sales(3y)3.58%
Cap/Sales(5y)3.97%
Profit Quality(3y)103.3%
Profit Quality(5y)94.38%
High Growth Momentum
Growth
EPS 1Y (TTM)5.89%
EPS 3Y20.87%
EPS 5Y1.15%
EPS Q2Q%10.25%
EPS Next Y9.54%
EPS Next 2Y9.77%
EPS Next 3Y9.68%
EPS Next 5YN/A
Revenue 1Y (TTM)-3.32%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%0.17%
Revenue Next Year1.13%
Revenue Next 2Y2.52%
Revenue Next 3Y3.2%
Revenue Next 5YN/A
EBIT growth 1Y6.43%
EBIT growth 3Y26.69%
EBIT growth 5Y5.08%
EBIT Next Year38.58%
EBIT Next 3Y15.6%
EBIT Next 5YN/A
FCF growth 1Y26.07%
FCF growth 3Y49.68%
FCF growth 5Y23.37%
OCF growth 1Y19.43%
OCF growth 3Y24.36%
OCF growth 5Y11.19%