PEARSON PLC-SPONSORED ADR (PSO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:PSO - US7050151056 - ADR
14.17 USD
+0.05 (+0.35%)
13.71 USD
-0.46 (-3.25%)
We assign a fundamental rating of 6 out of 10 to PSO. PSO was compared to 77 industry peers in the Diversified Consumer Services industry. PSO has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. PSO is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year PSO was profitable.
PSO had a positive operating cash flow in the past year.
Each year in the past 5 years PSO has been profitable.
PSO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 7.08%, PSO is in the better half of the industry, outperforming 71.43% of the companies in the same industry.
PSO has a Return On Equity of 12.29%. This is in the better half of the industry: PSO outperforms 67.53% of its industry peers.
With a decent Return On Invested Capital value of 8.65%, PSO is doing good in the industry, outperforming 76.62% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for PSO is below the industry average of 10.17%.
The 3 year average ROIC (6.70%) for PSO is below the current ROIC(8.65%), indicating increased profibility in the last year.
| 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
With a decent Profit Margin value of 12.53%, PSO is doing good in the industry, outperforming 76.62% of the companies in the same industry.
In the last couple of years the Profit Margin of PSO has grown nicely.
PSO's Operating Margin of 15.77% is fine compared to the rest of the industry. PSO outperforms 76.62% of its industry peers.
PSO's Operating Margin has improved in the last couple of years.
PSO has a Gross Margin of 51.45%. This is comparable to the rest of the industry: PSO outperforms 57.14% of its industry peers.
PSO's Gross Margin has been stable in the last couple of years.
| 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
PSO has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, PSO has less shares outstanding
The number of shares outstanding for PSO has been reduced compared to 5 years ago.
The debt/assets ratio for PSO is higher compared to a year ago.
2.2 Solvency
PSO has an Altman-Z score of 2.79. This is not the best score and indicates that PSO is in the grey zone with still only limited risk for bankruptcy at the moment.
PSO's Altman-Z score of 2.79 is fine compared to the rest of the industry. PSO outperforms 71.43% of its industry peers.
The Debt to FCF ratio of PSO is 2.42, which is a good value as it means it would take PSO, 2.42 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of PSO (2.42) is better than 76.62% of its industry peers.
PSO has a Debt/Equity ratio of 0.40. This is a healthy value indicating a solid balance between debt and equity.
PSO has a Debt to Equity ratio (0.40) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 2.42 | ||
| Altman-Z | 2.79 |
ROIC/WACC1
WACC8.65%
2.3 Liquidity
PSO has a Current Ratio of 2.31. This indicates that PSO is financially healthy and has no problem in meeting its short term obligations.
With an excellent Current ratio value of 2.31, PSO belongs to the best of the industry, outperforming 80.52% of the companies in the same industry.
PSO has a Quick Ratio of 2.24. This indicates that PSO is financially healthy and has no problem in meeting its short term obligations.
With an excellent Quick ratio value of 2.24, PSO belongs to the best of the industry, outperforming 80.52% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.31 | ||
| Quick Ratio | 2.24 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.29% over the past year.
The Earnings Per Share has been growing slightly by 1.15% on average over the past years.
PSO shows a decrease in Revenue. In the last year, the revenue decreased by -0.82%.
PSO shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -1.70% yearly.
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
The Earnings Per Share is expected to grow by 7.68% on average over the next years.
Based on estimates for the next years, PSO will show a small growth in Revenue. The Revenue will grow by 3.16% on average per year.
EPS Next Y2.86%
EPS Next 2Y6.9%
EPS Next 3Y8.3%
EPS Next 5Y7.68%
Revenue Next Year-0.16%
Revenue Next 2Y2.43%
Revenue Next 3Y3.08%
Revenue Next 5Y3.16%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 16.67, PSO is valued correctly.
Based on the Price/Earnings ratio, PSO is valued a bit cheaper than 70.13% of the companies in the same industry.
PSO's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 26.59.
A Price/Forward Earnings ratio of 14.26 indicates a correct valuation of PSO.
Compared to the rest of the industry, the Price/Forward Earnings ratio of PSO indicates a somewhat cheap valuation: PSO is cheaper than 72.73% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of PSO to the average of the S&P500 Index (24.03), we can say PSO is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.67 | ||
| Fwd PE | 14.26 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, PSO is valued a bit cheaper than the industry average as 64.94% of the companies are valued more expensively.
85.71% of the companies in the same industry are more expensive than PSO, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 10.84 | ||
| EV/EBITDA | 10.1 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates PSO does not grow enough to justify the current Price/Earnings ratio.
The decent profitability rating of PSO may justify a higher PE ratio.
PEG (NY)5.83
PEG (5Y)14.48
EPS Next 2Y6.9%
EPS Next 3Y8.3%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.31%, PSO has a reasonable but not impressive dividend return.
PSO's Dividend Yield is rather good when compared to the industry average which is at 0.32. PSO pays more dividend than 94.81% of the companies in the same industry.
PSO's Dividend Yield is a higher than the S&P500 average which is at 1.88.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.31% |
5.2 History
The dividend of PSO has a limited annual growth rate of 4.00%.
PSO has paid a dividend for at least 10 years, which is a reliable track record.
The dividend of PSO decreased in the last 3 years.
Dividend Growth(5Y)4%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
PSO pays out 36.05% of its income as dividend. This is a sustainable payout ratio.
The dividend of PSO is growing, but earnings are growing more, so the dividend growth is sustainable.
DP36.05%
EPS Next 2Y6.9%
EPS Next 3Y8.3%
14.17
+0.05 (+0.35%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryDiversified Consumer Services
Earnings (Last)
Earnings (Next)
Inst Owners77.62%
Inst Owner Change-1.99%
Ins Owners0.2%
Ins Owner ChangeN/A
Market Cap9.02B
Revenue(TTM)3.52B
Net Income(TTM)441.00M
Analysts68.57
Price TargetN/A
Short Float %0.33%
Short Ratio2.74
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.31% |
Yearly Dividend0.32
Dividend Growth(5Y)4%
DP36.05%
Div Incr Years2
Div Non Decr Years2
Ex-Date
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)0.83%
PT rev (3m)-1.35%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-0.27%
EPS NY rev (3m)0.58%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0.17%
Revenue NY rev (3m)0.03%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.67 | ||
| Fwd PE | 14.26 | ||
| P/S | 1.9 | ||
| P/FCF | 10.84 | ||
| P/OCF | 8.98 | ||
| P/B | 1.86 | ||
| P/tB | 8.56 | ||
| EV/EBITDA | 10.1 |
EPS(TTM)0.85
EY6%
EPS(NY)0.99
Fwd EY7.01%
FCF(TTM)1.31
FCFY9.22%
OCF(TTM)1.58
OCFY11.14%
SpS7.47
BVpS7.62
TBVpS1.66
PEG (NY)5.83
PEG (5Y)14.48
Graham Number12.07
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%
ROICexgc growth 3Y7.27%
ROICexgc 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 | 2.79 |
F-Score8
WACC8.65%
ROIC/WACC1
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 Y2.86%
EPS Next 2Y6.9%
EPS Next 3Y8.3%
EPS Next 5Y7.68%
Revenue 1Y (TTM)-0.82%
Revenue growth 3Y1.19%
Revenue growth 5Y-1.7%
Sales Q2Q%-1.82%
Revenue Next Year-0.16%
Revenue Next 2Y2.43%
Revenue Next 3Y3.08%
Revenue Next 5Y3.16%
EBIT growth 1Y9.47%
EBIT growth 3Y26.69%
EBIT growth 5Y5.08%
EBIT Next Year39.42%
EBIT Next 3Y15.87%
EBIT Next 5Y14.86%
FCF growth 1Y133.33%
FCF growth 3Y49.68%
FCF growth 5Y23.37%
OCF growth 1Y82.8%
OCF growth 3Y24.36%
OCF growth 5Y11.19%
PEARSON PLC-SPONSORED ADR / PSO FAQ
What is the ChartMill fundamental rating of PEARSON PLC-SPONSORED ADR (PSO) stock?
ChartMill assigns a fundamental rating of 6 / 10 to PSO.
What is the valuation status of PEARSON PLC-SPONSORED ADR (PSO) stock?
ChartMill assigns a valuation rating of 5 / 10 to PEARSON PLC-SPONSORED ADR (PSO). This can be considered as Fairly Valued.
How profitable is PEARSON PLC-SPONSORED ADR (PSO) stock?
PEARSON PLC-SPONSORED ADR (PSO) has a profitability rating of 7 / 10.
What are the PE and PB ratios of PEARSON PLC-SPONSORED ADR (PSO) stock?
The Price/Earnings (PE) ratio for PEARSON PLC-SPONSORED ADR (PSO) is 16.67 and the Price/Book (PB) ratio is 1.86.
What is the earnings growth outlook for PEARSON PLC-SPONSORED ADR?
The Earnings per Share (EPS) of PEARSON PLC-SPONSORED ADR (PSO) is expected to grow by 2.86% in the next year.