PEARSON PLC (PES.DE) Stock Fundamental Analysis
Europe - FRA:PES - GB0006776081 - Common Stock
12.595 EUR
+0.06 (+0.48%)
Overall PES gets a fundamental rating of 6 out of 10. We evaluated PES against 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 correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
PES had positive earnings in the past year.
In the past year PES had a positive cash flow from operations.
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
The Return On Assets of PES (7.08%) is better than 100.00% of its industry peers.
The Return On Equity of PES (12.29%) is better than 100.00% of its industry peers.
PES's Return On Invested Capital of 8.65% is fine compared to the rest of the industry. PES outperforms 66.67% of its industry peers.
PES had an Average Return On Invested Capital over the past 3 years of 6.70%. This is below the industry average of 8.77%.
The last Return On Invested Capital (8.65%) for PES is above the 3 year average (6.70%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.08% | ||
| ROE | 12.29% | ||
| ROIC | 8.65% |
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
The Profit Margin of PES (12.53%) 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 15.77%. This is amongst the best in the industry. PES outperforms 100.00% of its industry peers.
In the last couple of years the Operating Margin of PES has grown nicely.
PES has a Gross Margin of 51.45%. This is in the better half of the industry: PES outperforms 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 | 15.77% | ||
| PM (TTM) | 12.53% | ||
| GM | 51.45% |
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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), PES is destroying value.
PES has less shares outstanding than it did 1 year ago.
The number of shares outstanding for PES has been reduced compared to 5 years ago.
PES has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 2.87 indicates that PES is not a great score, but indicates only limited risk for bankruptcy at the moment.
PES has a Altman-Z score of 2.87. This is in the better half of the industry: PES outperforms 66.67% of its industry peers.
The Debt to FCF ratio of PES is 2.42, which is a good value as it means it would take PES, 2.42 years of fcf income to pay off all of its debts.
PES's Debt to FCF ratio of 2.42 is fine compared to the rest of the industry. PES outperforms 66.67% of its industry peers.
PES has a Debt/Equity ratio of 0.40. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of PES (0.40) is better than 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 2.42 | ||
| Altman-Z | 2.87 |
ROIC/WACC0.9
WACC9.62%
2.3 Liquidity
A Current Ratio of 2.31 indicates that PES has no problem at all paying its short term obligations.
PES has a Current ratio of 2.31. This is amongst the best in the industry. PES outperforms 100.00% of its industry peers.
PES has a Quick Ratio of 2.24. This indicates that PES is financially healthy and has no problem in meeting its short term obligations.
PES has a better Quick ratio (2.24) than 100.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.31 | ||
| Quick Ratio | 2.24 |
3. Growth
3.1 Past
PES shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.29%.
Measured over the past 5 years, PES shows a small growth in Earnings Per Share. The EPS has been growing by 1.15% on average per year.
PES shows a decrease in Revenue. In the last year, the revenue decreased by -0.82%.
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)3.29%
EPS 3Y20.87%
EPS 5Y1.15%
EPS Q2Q%-5.47%
Revenue 1Y (TTM)-0.82%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%-1.82%
3.2 Future
Based on estimates for the next years, PES will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.39% on average per year.
PES is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.04% yearly.
EPS Next Y3.68%
EPS Next 2Y7.05%
EPS Next 3Y8.39%
EPS Next 5YN/A
Revenue Next Year-0.19%
Revenue Next 2Y2.25%
Revenue Next 3Y3.04%
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
With a Price/Earnings ratio of 18.25, PES is valued on the expensive side.
Based on the Price/Earnings ratio, PES is valued cheaper than 100.00% of the companies in the same industry.
PES is valuated rather cheaply when we compare the Price/Earnings ratio to 27.31, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 15.61, the valuation of PES can be described as correct.
Based on the Price/Forward Earnings ratio, PES is valued a bit cheaper than 66.67% 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 22.85.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.25 | ||
| Fwd PE | 15.61 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PES is valued a bit cheaper than the industry average as 66.67% 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 66.67% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.39 | ||
| EV/EBITDA | 10.54 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates PES does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of PES may justify a higher PE ratio.
PEG (NY)4.96
PEG (5Y)15.85
EPS Next 2Y7.05%
EPS Next 3Y8.39%
5. Dividend
5.1 Amount
PES has a Yearly Dividend Yield of 2.32%.
PES's Dividend Yield is a higher than the industry average which is at 3.90.
Compared to an average S&P500 Dividend Yield of 2.40, PES has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
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
36.05% 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.
DP36.05%
EPS Next 2Y7.05%
EPS Next 3Y8.39%
FRA:PES (10/16/2025, 7:00:00 PM)
12.595
+0.06 (+0.48%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners77.62%
Inst Owner ChangeN/A
Ins Owners0.2%
Ins Owner ChangeN/A
Market Cap8.08B
Analysts68.57
Price Target14.47 (14.89%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.32% |
Yearly Dividend0.26
Dividend Growth(5Y)4%
DP36.05%
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)-1.38%
PT rev (3m)-6.2%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-0.07%
EPS NY rev (3m)-5.35%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.25 | ||
| Fwd PE | 15.61 | ||
| P/S | 1.99 | ||
| P/FCF | 11.39 | ||
| P/OCF | 9.43 | ||
| P/B | 1.95 | ||
| P/tB | 8.99 | ||
| EV/EBITDA | 10.54 |
EPS(TTM)0.69
EY5.48%
EPS(NY)0.81
Fwd EY6.41%
FCF(TTM)1.11
FCFY8.78%
OCF(TTM)1.34
OCFY10.61%
SpS6.32
BVpS6.45
TBVpS1.4
PEG (NY)4.96
PEG (5Y)15.85
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.08% | ||
| ROE | 12.29% | ||
| ROCE | 10.65% | ||
| ROIC | 8.65% | ||
| ROICexc | 9.26% | ||
| ROICexgc | 21.92% | ||
| OM | 15.77% | ||
| PM (TTM) | 12.53% | ||
| GM | 51.45% | ||
| FCFM | 17.5% |
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-Score8
Asset Turnover0.57
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 2.42 | ||
| Debt/EBITDA | 1.84 | ||
| Cap/Depr | 58.45% | ||
| Cap/Sales | 3.64% | ||
| Interest Coverage | 10.09 | ||
| Cash Conversion | 96.12% | ||
| Profit Quality | 139.68% | ||
| Current Ratio | 2.31 | ||
| Quick Ratio | 2.24 | ||
| Altman-Z | 2.87 |
F-Score8
WACC9.62%
ROIC/WACC0.9
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)3.29%
EPS 3Y20.87%
EPS 5Y1.15%
EPS Q2Q%-5.47%
EPS Next Y3.68%
EPS Next 2Y7.05%
EPS Next 3Y8.39%
EPS Next 5YN/A
Revenue 1Y (TTM)-0.82%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%-1.82%
Revenue Next Year-0.19%
Revenue Next 2Y2.25%
Revenue Next 3Y3.04%
Revenue Next 5YN/A
EBIT growth 1Y9.47%
EBIT growth 3Y26.69%
EBIT growth 5Y5.08%
EBIT Next Year36.45%
EBIT Next 3Y14.89%
EBIT Next 5YN/A
FCF growth 1Y133.33%
FCF growth 3Y49.68%
FCF growth 5Y23.37%
OCF growth 1Y82.8%
OCF growth 3Y24.36%
OCF growth 5Y11.19%