Pearson plc
Pearson plc Fundamental Analysis
Pearson plc (PSORF) shows weak financial fundamentals with a PE ratio of 26.30, profit margin of 9.32%, and ROE of 6.99%. The company generates $2.6B in annual revenue with weak year-over-year growth of -3.32%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 36.7/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze PSORF's fundamental strength across five key dimensions:
Efficiency Score
WeakPSORF struggles to generate sufficient returns from assets.
Valuation Score
ModeratePSORF shows balanced valuation metrics.
Growth Score
ModeratePSORF shows steady but slowing expansion.
Financial Health Score
ExcellentPSORF maintains a strong and stable balance sheet.
Profitability Score
WeakPSORF struggles to sustain strong margins.
Key Financial Metrics
Is PSORF Expensive or Cheap?
P/E Ratio
PSORF trades at 26.30 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, PSORF's PEG of -1.32 indicates potential undervaluation.
Price to Book
The market values Pearson plc at 1.82 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 6.43 times EBITDA. This is generally considered low.
How Well Does PSORF Make Money?
Net Profit Margin
For every $100 in sales, Pearson plc keeps $9.32 as profit after all expenses.
Operating Margin
Core operations generate 14.54 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $6.99 in profit for every $100 of shareholder equity.
ROA
Pearson plc generates $3.92 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Pearson plc produces operating cash flow of $552.53M, showing steady but balanced cash generation.
Free Cash Flow
Pearson plc generates strong free cash flow of $531.13M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $0.86 in free cash annually.
FCF Yield
PSORF converts 8.43% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
26.30
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-1.32
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.82
vs 25 benchmark
P/S Ratio
Price to sales ratio
2.38
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.52
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.00
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.07
vs 25 benchmark
ROA
Return on assets percentage
0.04
vs 25 benchmark
ROCE
Return on capital employed
0.07
vs 25 benchmark
How PSORF Stacks Against Its Sector Peers
| Metric | PSORF Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 26.30 | 22.91 | Worse (Expensive) |
| ROE | 6.99% | 1005.00% | Weak |
| Net Margin | 9.32% | -60132.00% (disorted) | Weak |
| Debt/Equity | 0.52 | 1.28 | Strong (Low Leverage) |
| Current Ratio | 2.00 | 1.65 | Neutral |
| ROA | 3.92% | -581836.00% (disorted) | Weak |
PSORF outperforms its industry in 1 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Pearson plc's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
5.99%
Industry Style: Growth, Technology, Streaming
GrowingEPS CAGR
89.80%
Industry Style: Growth, Technology, Streaming
High GrowthFCF CAGR
96.18%
Industry Style: Growth, Technology, Streaming
High Growth