PEARSON PLC (PES.DE) Stock Fundamental Analysis
FRA:PES - Deutsche Boerse Ag - GB0006776081 - Common Stock - Currency: EUR
Overall PES gets a fundamental rating of 6 out of 10. We evaluated PES against 5 industry peers in the Diversified Consumer Services industry. Both the health and profitability get an excellent rating, making PES a very profitable company, without any liquidiy or solvency issues. PES is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year PES was profitable.
PES had a positive operating cash flow in the past year.
PES had positive earnings in each of the past 5 years.
In the past 5 years PES always reported a positive cash flow from operatings.
1.2 Ratios
With an excellent Return On Assets value of 6.30%, PES belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
PES has a better Return On Equity (10.72%) than 100.00% of its industry peers.
PES's Return On Invested Capital of 8.18% is amongst the best of the industry. PES outperforms 100.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.3% | ||
| ROE | 10.72% | ||
| ROIC | 8.18% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
The Profit Margin of PES (12.22%) is better than 100.00% of its industry peers.
PES's Profit Margin has improved in the last couple of years.
PES has a Operating Margin of 15.37%. This is amongst the best in the industry. PES outperforms 100.00% of its industry peers.
PES's Operating Margin has improved in the last couple of years.
PES's Gross Margin of 50.99% is fine compared to the rest of the industry. PES outperforms 75.00% 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 3Y25.12%
OM growth 5Y6.85%
PM growth 3Y33.26%
PM growth 5Y12.36%
GM growth 3Y1.31%
GM growth 5Y-0.38%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), PES is destroying value.
There is no outstanding debt for PES. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
2.2 Solvency
PES has an Altman-Z score of 3.06. This indicates that PES is financially healthy and has little risk of bankruptcy at the moment.
PES has a Altman-Z score of 3.06. This is in the better half of the industry: PES outperforms 75.00% 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 in the better half of the industry: PES outperforms 75.00% of its industry peers.
A Debt/Equity ratio of 0.29 indicates that PES is not too dependend on debt financing.
PES's Debt to Equity ratio of 0.29 is fine compared to the rest of the industry. PES outperforms 75.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.29 | ||
| Debt/FCF | 2.93 | ||
| Altman-Z | 3.06 |
ROIC/WACC0.88
WACC9.29%
2.3 Liquidity
A Current Ratio of 1.85 indicates that PES should not have too much problems paying its short term obligations.
With a Current ratio value of 1.85, PES perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
PES has a Quick Ratio of 1.80. This is a normal value and indicates that PES is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 1.80, PES is in line with its industry, outperforming 50.00% of the companies in the same industry.
PES does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.85 | ||
| Quick Ratio | 1.8 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 20.57% over the past year.
The Earnings Per Share has been growing by 13.32% on average over the past years. This is quite good.
The Revenue has decreased by -3.32% in the past year.
Measured over the past years, PES shows a decrease in Revenue. The Revenue has been decreasing by -1.70% on average per year.
EPS 1Y (TTM)20.57%
EPS 3Y39.6%
EPS 5Y13.32%
EPS Q2Q%51.7%
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 10.41% on average over the next years. This is quite good.
The Revenue is expected to grow by 4.38% on average over the next years.
EPS Next Y11.47%
EPS Next 2Y10.41%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue Next Year5.27%
Revenue Next 2Y4.91%
Revenue Next 3Y4.38%
Revenue Next 5YN/A
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past 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
Based on the Price/Earnings ratio of 20.26, the valuation of PES can be described as rather expensive.
PES's Price/Earnings ratio is a bit cheaper when compared to the industry. PES is cheaper than 75.00% of the companies in the same industry.
When comparing the Price/Earnings ratio of PES to the average of the S&P500 Index (29.35), we can say PES is valued slightly cheaper.
A Price/Forward Earnings ratio of 18.64 indicates a rather expensive valuation of PES.
PES's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. PES is cheaper than 75.00% of the companies in the same industry.
PES is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.10, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.26 | ||
| Fwd PE | 18.64 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PES is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, PES is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.11 | ||
| EV/EBITDA | 12.21 |
4.3 Compensation for Growth
PES's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
PES has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.77
PEG (5Y)1.52
EPS Next 2Y10.41%
EPS Next 3YN/A
5. Dividend
5.1 Amount
PES has a Yearly Dividend Yield of 1.86%.
Compared to an average industry Dividend Yield of 2.55, 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 the average S&P500 Dividend Yield of 2.33, PES is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.86% |
5.2 History
The dividend of PES has a limited annual growth rate of 4.79%.
Dividend Growth(5Y)4.79%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
35.94% of the earnings are spent on dividend by PES. This is a low number and sustainable payout ratio.
The dividend of PES is growing, but earnings are growing more, so the dividend growth is sustainable.
DP35.94%
EPS Next 2Y10.41%
EPS Next 3YN/A
FRA:PES (3/6/2025, 7:00:00 PM)
15.4
-1.01 (-6.18%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners83.16%
Inst Owner ChangeN/A
Ins Owners0.26%
Ins Owner ChangeN/A
Market Cap10.23B
Analysts67.5
Price Target16.16 (4.94%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.86% |
Yearly Dividend0.26
Dividend Growth(5Y)4.79%
DP35.94%
Div Incr Years3
Div Non Decr Years3
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)4.63%
PT rev (3m)11.8%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)0.04%
EPS NY rev (3m)1.85%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)-0.47%
Revenue NY rev (3m)1.54%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.26 | ||
| Fwd PE | 18.64 | ||
| P/S | 2.42 | ||
| P/FCF | 17.11 | ||
| P/OCF | 13.72 | ||
| P/B | 2.13 | ||
| P/tB | 8.42 | ||
| EV/EBITDA | 12.21 |
EPS(TTM)0.76
EY4.94%
EPS(NY)0.83
Fwd EY5.37%
FCF(TTM)0.9
FCFY5.85%
OCF(TTM)1.12
OCFY7.29%
SpS6.36
BVpS7.25
TBVpS1.83
PEG (NY)1.77
PEG (5Y)1.52
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.3% | ||
| ROE | 10.72% | ||
| ROCE | 10.08% | ||
| ROIC | 8.18% | ||
| ROICexc | 9.09% | ||
| ROICexgc | 23.96% | ||
| OM | 15.37% | ||
| PM (TTM) | 12.22% | ||
| GM | 50.99% | ||
| FCFM | 14.16% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3Y25.12%
OM growth 5Y6.85%
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 | 3.06 |
F-Score7
WACC9.29%
ROIC/WACC0.88
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)20.57%
EPS 3Y39.6%
EPS 5Y13.32%
EPS Q2Q%51.7%
EPS Next Y11.47%
EPS Next 2Y10.41%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue 1Y (TTM)-3.32%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%0.17%
Revenue Next Year5.27%
Revenue Next 2Y4.91%
Revenue Next 3Y4.38%
Revenue Next 5YN/A
EBIT growth 1Y6.43%
EBIT growth 3Y26.61%
EBIT growth 5Y5.04%
EBIT Next Year40.42%
EBIT Next 3YN/A
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%