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Pearson
(LSE:PSON)
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Rating:65Neutral
Price Target:
1,475.00 p
â–²(21.15% Upside)
Action:Downgraded
Date:08/05/26
The score is driven primarily by steady financial performance with strong operating profitability but weaker cash-flow momentum and rising leverage. The earnings call adds support due to strong H1 execution and reaffirmed guidance, while technicals are mixed and valuation is somewhat expensive versus the modest dividend yield.
Positive Factors
Virtual Learning Growth
Strong Virtual Learning growth combines rising enrollments, improved margins, and successful contract renewals. This supports a more recurring and defensible revenue base, while planned school openings and continued digital adoption could sustain momentum over the next several quarters.
Negative Factors
Low Revenue Growth
Broad revenue growth has been subdued, with only a modest increase in 2025 following earlier declines. This limits operating leverage and makes sustained earnings expansion more dependent on cost savings, mix improvement, and successful growth in selected digital businesses.
Read all positive and negative factors
Positive Factors
Negative Factors
Virtual Learning Growth
Strong Virtual Learning growth combines rising enrollments, improved margins, and successful contract renewals. This supports a more recurring and defensible revenue base, while planned school openings and continued digital adoption could sustain momentum over the next several quarters.
Read all positive factors
Pearson (PSON) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£7.80B
Dividend Yield1.97%
Average Volume (3M)1.81M
Price to Earnings (P/E)25.5
Beta (1Y)0.42
Revenue Growth3.24%
EPS Growth-25.23%
CountryUK
Employees15,165
SectorCommunication Services
Sector Strength97
IndustryPublishing
Share Statistics
EPS (TTM)0.51
Shares Outstanding601,794,070
10 Day Avg. Volume1,438,127
30 Day Avg. Volume1,808,763
Financial Highlights & Ratios
PEG Ratio-1.01
Price to Book (P/B)1.87
Price to Sales (P/S)1.91
P/FCF Ratio10.35
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£1,303.33Price Target Upside7.05% Upside
Rating ConsensusHold
Number of Analyst Covering9
EPS Forecast (FY)0.71
Revenue Forecast (FY)£3.72B
Pearson Business Overview & Revenue Model
Company Description
Pearson plc operates internationally, providing a comprehensive array of educational materials, assessment solutions, and related services across the United Kingdom, the United States, Canada, the Asia Pacific region, and numerous other European c...
How the Company Makes Money
Pearson primarily generates revenue by selling education products and services across several core streams. A major source is assessments: Pearson develops, administers, and scores exams and assessment services for academic, professional, and work...
Pearson Earnings Call Summary
Earnings Call Date:Jul 31, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Feb 25, 2027
Earnings Call Sentiment Positive
The call emphasizes solid H1 financial results (revenue +4%, adjusted operating profit +14%, EPS +18–19%), strong free cash flow and continued confidence in full-year guidance. Several strategic positives were highlighted: robust Virtual Learning momentum (+19% revenue), Inclusive Access acceleration (23% in Q2), enterprise skilling and rapid AI lab certification rollout, operational synergies (AI customer service at ~40% interactions, incentive consolidation) and product innovation with strong early learning outcomes. Key challenges include technical issues on the new UK primary testing platform, pockets of weakness in English Language Learning (ELL) driven by weaker international mobility and migration policy, margin pressure in Assessments & Qualifications from sales mix and one-off SATs delivery costs, and the revenue impact from the loss of the New Jersey contract. Overall, the positive financial performance, cash generation, and strategic momentum outweigh the operational and market headwinds noted, supporting a constructive outlook.Positive Updates
Group Financial Performance
Underlying group revenue up 4% in H1; adjusted operating profit up 14% underlying to £226m; margin expanded 140 basis points to 15.5%. Adjusted EPS increased 19% at constant exchange rates (18% headline) to 28.9p. Free cash flow rose by £103m to £259m. Company executed an accelerated £350m share buyback and proposed a 5% interim dividend increase to 8.2p.
Negative Updates
UK Primary Testing Platform Issues
Delivered the first large-scale testing cycle for U.K. primary schools (~2 million papers) but experienced technical issues with the new platform that caused a short delay in delivery of results; company apologized and is strengthening delivery for future cycles.
Read all updates
Q2-2026 Updates
Positive
Negative
Group Financial Performance
Underlying group revenue up 4% in H1; adjusted operating profit up 14% underlying to £226m; margin expanded 140 basis points to 15.5%. Adjusted EPS increased 19% at constant exchange rates (18% headline) to 28.9p. Free cash flow rose by £103m to £259m. Company executed an accelerated £350m share buyback and proposed a 5% interim dividend increase to 8.2p.
Read all positive updates
Company Guidance
Pearson said it is on track to deliver full‑year guidance after a strong H1: revenue +4%, adjusted operating profit +14% to GBP 226m, margin 15.5% (+140bps), adjusted EPS +19% (28.9p; headline +18%), and free cash flow GBP 259m (up GBP 103m); net debt was GBP 1.3bn (up GBP 0.3bn) after an accelerated GBP 350m buyback and a proposed interim dividend +5% to 8.2p. For 2026 management reiterated mid‑single‑digit group underlying revenue growth, group adjusted operating profit GBP 640–685m (FY FX), free cash conversion 90–100%, medium‑term margin expansion c.40bps, and business‑level expectations (A&Q low‑ to mid‑single digit; Virtual Learning stronger than 2025; Higher Ed >2025; ELL more uncertain).Pearson Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
63
Positive
Cash Flow
58
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.63B | 3.58B | 3.55B | 3.67B | 3.84B | 3.43B |
| Gross Profit | 1.89B | 1.72B | 1.81B | 1.83B | 1.79B | 1.68B |
| EBITDA | 1.10B | 1.13B | 1.09B | 1.07B | 930.00M | 751.00M |
| Net Income | 319.00M | 335.00M | 434.00M | 378.00M | 242.00M | 177.00M |
Balance Sheet | ||||||
| Total Assets | 6.37B | 6.46B | 6.89B | 6.73B | 7.31B | 7.34B |
| Cash, Cash Equivalents and Short-Term Investments | 339.00M | 333.00M | 543.00M | 312.00M | 543.00M | 937.00M |
| Total Debt | 1.76B | 1.48B | 1.47B | 1.16B | 1.22B | 1.40B |
| Total Liabilities | 3.01B | 2.79B | 2.84B | 2.74B | 2.89B | 3.06B |
| Stockholders Equity | 3.34B | 3.65B | 4.04B | 3.97B | 4.40B | 4.27B |
Cash Flow | ||||||
| Free Cash Flow | 785.00M | 661.00M | 503.00M | 399.00M | 214.00M | 150.00M |
| Operating Cash Flow | 826.00M | 690.00M | 627.00M | 525.00M | 361.00M | 326.00M |
| Investing Cash Flow | -302.00M | -277.00M | -131.00M | -301.00M | 13.00M | -80.00M |
| Financing Cash Flow | -549.00M | -609.00M | -241.00M | -450.00M | -804.00M | -414.00M |
Pearson Technical Analysis
Positive
1217.50
Price Trends
1239.42
Positive
1221.95
Positive
1109.89
Positive
Market Momentum
39.06
Negative
57.72
Neutral
56.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:PSON, the sentiment is Positive. The current price of 1217.5 is below the 20-day moving average (MA) of 1305.92, below the 50-day MA of 1239.42, and above the 200-day MA of 1109.89, indicating a bullish trend. The MACD of 39.06 indicates Negative momentum. The RSI at 57.72 is Neutral, neither overbought nor oversold. The STOCH value of 56.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:PSON.
Pearson Risk Analysis
Pearson disclosed 31 risk factors in its most recent earnings report. Pearson reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Pearson Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | £50.18B | 22.94 | 125.53% | 2.38% | 1.95% | 20.56% | |
77 Outperform | £525.27M | 26.16 | 9.41% | 2.54% | -6.66% | -10.04% | |
69 Neutral | £11.25B | 49.03 | 3.90% | 2.72% | 4.51% | 216.21% | |
65 Neutral | £7.80B | 25.52 | 9.13% | 1.97% | 3.24% | -25.23% | |
62 Neutral | £247.55M | 7.91 | 3.57% | 5.97% | -8.41% | -51.11% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
47 Neutral | £132.55M | -13.37 | -32.44% | 1.23% | -4.93% | -232.75% |
* Communication Services Sector Average
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Pearson Corporate Events
Business Operations and StrategyFinancial DisclosuresM&A Transactions
Pearson lifts Q3 growth, bolsters AI skills push with acquisitions and business revamp
Positive
Oct 22, 2026
Pearson reported a 5% increase in underlying group revenue for the first nine months of 2026, with growth accelerating to 6% in the third quarter, and said it remains on track to meet full-year guidance for mid-single-digit revenue growth, adjuste...
Executive/Board ChangesRegulatory Filings and Compliance
Pearson Updates on Director Role Following Schroders Acquisition
Neutral
Oct 13, 2026
Pearson has disclosed a change in its board-linked directorships following the acquisition of Schroders plc by Pantheon LLC on 1 October 2026. The company announced that Annette Thomas, a Non-Executive Director at Pearson, ended her role as a Non-...
Business Operations and StrategyPrivate Placements and Financing
Pearson Issues New Shares to Satisfy Employee Save for Shares Awards
Neutral
Oct 1, 2026
Pearson plc has issued 74,167 ordinary shares of 25 pence each to satisfy the vesting of awards granted under its Save for Shares Plan, a scheme that allows employees to acquire equity in the company over time. The newly issued shares are fungible...
Regulatory Filings and Compliance
Pearson Confirms Share Capital and Voting Rights for FCA Transparency
Neutral
Oct 1, 2026
Pearson PLC has confirmed that as of the close of business on 30 September 2026, it has 601,794,060 ordinary shares of 25p each in issue, with each share carrying one vote at general meetings and no shares held in treasury. This disclosure, made u...
Regulatory Filings and Compliance
Pearson Executive Increases ADR Holdings Through Dividend Reinvestment Plan
Neutral
Sep 23, 2026
Pearson disclosed a transaction by Tom ap Simon, its President of Higher Education and Virtual Learning, involving the purchase of American Depositary Receipts under the company’s Dividend Reinvestment Plan. The transaction, executed on 21 S...
Business Operations and StrategyExecutive/Board Changes
Pearson Adds Three Non-Executive Directors to Bolster Strategic and Tech Expertise
Positive
Sep 23, 2026
Pearson has strengthened its board by appointing Michael Barkin and Vivek Sharma as independent non-executive directors and Cevian Capital partner Alex Svensson as a non-executive director, effective 1 October 2026. The additions bring expertise i...
Business Operations and StrategyRegulatory Filings and Compliance
Pearson Issues New Shares to Fulfil Employee Save for Shares Awards
Neutral
Sep 1, 2026
Pearson plc has issued 320,603 new ordinary shares of 25 pence each to satisfy the vesting of awards granted under its Save for Shares Plan, a scheme that allows employees to acquire shares over time. The shares, issued between 1 August and 31 Aug...
Regulatory Filings and Compliance
Pearson Updates Share Capital and Voting Rights Totals
Neutral
Sep 1, 2026
Pearson reported that, as of 31 August 2026, it has 601,719,893 ordinary shares of 25p each in issue, all of which are admitted to trading and carry one vote per share at general meetings. The company confirmed it holds no shares in treasury, mean...
Regulatory Filings and Compliance
Pearson Discloses Senior Executive Share Sale on London Market
Neutral
Aug 28, 2026
Pearson plc has disclosed a share transaction by Vishaal Gupta, President of Enterprise Learning and Skills, in line with regulatory requirements for persons discharging managerial responsibilities. The notification details the sale of ordinary sh...
Executive/Board ChangesRegulatory Filings and Compliance
Pearson Discloses Share Option Exercise by English Learning President
Neutral
Aug 18, 2026
Pearson plc disclosed a transaction involving Sharon Hague, President of English Language Learning, under regulatory requirements for persons discharging managerial responsibilities. The notification relates to ordinary shares of 25 pence each in ...
Regulatory Filings and Compliance
Pearson Reports Executive Sale of ADRs on NYSE
Neutral
Aug 12, 2026
Pearson disclosed a transaction by Tom ap Simon, its President for Higher Education and Virtual Learning, involving the sale of American Depositary Receipts representing ordinary shares in the company. The ADRs, each equivalent to one Pearson ordi...
Business Operations and StrategyRegulatory Filings and Compliance
Pearson Issues New Shares to Satisfy Employee Equity Awards
Neutral
Aug 3, 2026
Pearson has issued 258,796 new ordinary shares of 25 pence each to satisfy the vesting of employee awards under its Save for Shares and Employee Stock Purchase Plans. The shares, issued between 1 July and 31 July 2026, are fungible with existing s...
Regulatory Filings and Compliance
Pearson Confirms Share Capital and Voting Rights for FCA Disclosure
Positive
Aug 3, 2026
Pearson PLC has confirmed that, as of the close of business on 31 July 2026, it has 601,399,290 ordinary shares of 25p each admitted to trading, with each share carrying one voting right at general meetings and no shares held in Treasury. The comp...
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Pearson Delivers Strong H1 2026 Results and Reaffirms Guidance as Reskilling Demand Grows
Positive
Jul 31, 2026
Pearson reported a solid first-half performance for 2026, with underlying group revenue up 4% to £1.78bn and adjusted operating profit rising 14% to £276m, expanding margins to 15.5%. Growth was led by Virtual Learning, Enterprise Learni...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.