Pearson plc (PSO) AI Stock Analysis

Pearson plc provides educational courseware, assessments, and learning services worldwide across five key operating segments. Assessment & Qualifications houses Pearson VUE along with clinical assessments and academic qualifications like UK GCSEs and A levels. Virtual Learning delivers virtual school operations and online program management. English Language Learning offers institutional courseware and tests including the Pearson Test of English. Higher Education supplies universities and colleges with tailored courseware. Workforce Skills includes BTEC qualifications, GED testing, TalentLens assessments, Faethm analytics, Pearson College, and apprenticeships.

Pearson generated $3.58B in revenue in FY2025, representing 0.7% growth following declines of 4.3% in FY2023 and 3.3% in FY2024. Despite a 5-year revenue CAGR of 1.0% from FY2020 to FY2025, profitability has steadily expanded. Gross margin improved from 49.0% in FY2021 to 52.0% in FY2025, while operating margin rose from 5.3% to 17.3% over the same timeframe. Net income reached $327.7M in FY2025, down from $434.0M in FY2024. For the latest quarter ended June 30, 2026, quarterly revenue increased 3.3% year-over-year to support trailing twelve month revenue of $3.63B, although quarterly earnings declined 2.9%.

As of June 30, 2026, Pearson held $337.0M in cash and short-term investments against total debt of $1.75B, leaving net debt at $1.41B. The balance sheet shows a current ratio of 2.00 and a debt-to-equity ratio of 0.53, supported by shareholders' equity of $3.32B. Operating cash flow grew to $674.9M in FY2025, easily covering capital expenditures of $28.4M and producing $646.5M in free cash flow. In FY2025, Pearson deployed this cash into $414.7M of share buybacks and paid $156.5M in dividends.

Pearson trades at a trailing price-to-earnings ratio of 27.2x and a forward P/E of 18.0x, representing a premium over the median of its US-listed Communication Services peers at 16.2x trailing and 14.1x forward. Its price-to-sales ratio of 3.0x also sits above the peer median of 0.8x, though its EV-to-EBITDA multiple of 7.9x is lower than the peer median of 10.0x. Over the past year, the stock returned 27.5% compared to 16.8% for the S&P 500 (SPY), and its 5-year gain of 138.5% outperformed SPY's 83.0% return.

Pearson has paid consecutive dividends for 30 years and offers an annualized forward payout of $0.35 per share, yielding 1.90%. The company distributes dividends on a semiannual schedule with a payout ratio of 51.1%. Its dividend has achieved a 5-year annualized growth rate of 3.4%, and the most recent ex-dividend date occurred on August 14, 2026.

Wall Street coverage tracked in the data consists of 2 analysts, reflecting 0 Buy, 1 Hold, and 1 Sell recommendation. The mean price target is $15.70, which sits 13.9% below the last close of $18.24. For the current fiscal year ending December 31, 2026, analysts estimate revenue of $3.72B and EPS of $0.88, which represents 2.1% growth. For the next fiscal year, consensus projects revenue of $3.89B and EPS of $0.97. Over the last four quarters, Pearson beat EPS estimates 1 time.

This page is an AI-written research summary of Pearson plc (PSO). The text was generated on October 30, 2026 from Quotelinks data as of October 16, 2026 (company profile, annual results, latest balance sheet, valuation, price performance and analyst estimates). An automatic check rejects any draft that contains a figure not found in that data. It is not investment advice; verify figures on the linked tabs before making decisions.

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