Pearson plc
Pearson plc provides educational courseware, assessments, and services in the United Kingdom, the United States, Canada, the Asia Pacific, other European countries, and internationally. It operates through five segments: Assessment & Qualifications, Virtual Learning, English Language Learning, Ente…
Pearson plc provides educational courseware, assessments, and services in the United Kingdom, the United States, Canada, the Asia Pacific, other European countries, and internationally. It operates through five segments: Assessment & Qualifications, Virtual Learning, English Language Learning, Enterprise Learning & Skills, and Higher Education. The Assessment & Qualifications segment offers pearson professional assessments, US student assessment, clinical assessment, UK GCSE, and A levels and international academic qualifications and associated courseware, including the English-speaking Canadian and Australian K-12 businesses, and PDR. The Virtual Learning segment provides virtual schools and online program management. The English Language Learning segment offers Pearson test of English, institutional courseware, and English online solutions. The Enterprise Learning & Skills segment provides vocational qualifications, GED, TalentLens, Faethm, Credly, Pearson College, and Enterprise content and training. The Higher Education segment engages in the US, Canadian, and international higher education courseware businesses. Pearson plc was founded in 1844 and is headquartered in London, the United Kingdom.Priced within the modelled range
5-year outlook: Not shown because confidence is low: Earnings-based DCF disagrees strongly.
Other models: GBP 6.96–18.74 (median 12.00). The recommended value is in line with them.
Why: Free cash flow is positive and in line with earnings, and the dividend is small, so a cash-flow DCF fits best.
Details and the full model are below.
Market price within modeled range
Free-cash-flow DCF using Fiscal year 2025 reported free cash flow, with cash, debt, and shares from the latest report. Base assumptions are 4.7% growth, 2.9% terminal growth, and 10.4% discount. Low/high cases vary growth by 2 and terminal growth/discount by 1 percentage point; this illustrative range is not a statistical confidence interval or investment advice.
Assumptions: growth 4.70%, discount rate 10.40%, terminal growth 2.90% (sector defaults). See a worked example.
Blended growth assumption: 4.7% (sector default 7.0%, own revenue history 1.1%, analyst revenue consensus 5.4%).
Analyst consensus expects revenue growth of 5.4% a year; the growth assumption used is 4.7%.
Adjust assumptions
Why this model: Free cash flow is positive and in line with earnings, and the dividend is small, so a cash-flow DCF fits best.
Compare models- Recommended: Free-cash-flow DCF — GBP 13.08 (+2.1%)
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EPS-based Gordon proxy
— GBP 6.96 (-45.7%)
Not used: Treats all earnings as if paid out and ignores the cash kept for reinvestment, so it overstates value for companies that retain most profit.
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DCF (trailing free cash flow)
— GBP 13.08 (+2.1%)
Not used: Not chosen: Free-cash-flow DCF ranks ahead of it for this company.
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FCFF (steady state)
— GBP 12.00 (-6.4%)
Not used: Assumes only the long-run terminal growth rate from today, so it ignores the near-term growth expected.
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EV/EBITDA (12x)
— GBP 18.74 (+46.3%)
Not used: Used only when free cash flow is far below earnings even after averaging three years; a fixed 12x multiple also ignores sector differences.
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Fade DCF (10-year growth fade)
— GBP 13.04 (+1.8%)
Not used: An alternative growth path (fading over 10 years) shown for comparison; the automatic choice does not use it.
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EV/Sales (Rule of 40)
— GBP 37.49 (+192.7%)
Not used: Used only when cash-flow models land far below the price; here they do not.
| Bear GBP 9.36 | -36.9% |
| Base GBP 13.08 | 2.1% |
| Bull GBP 19.60 | 34.6% |
Margin = (value − price) / value, so it is measured against the value and reads lower than the upside to value, which is measured against the price. Positive means the price is below that case.
At GBP 12.81 the market implies about this annual free-cash-flow growth for 5 years (terminal 2.9%, discount 10.4%).
Compare: the market implies 4.3% a year, this model assumes 4.7%. The model is more optimistic than the price, which is why it reads as undervalued.
How the Free-cash-flow DCF value changes with growth (rows) and discount rate (columns). Green cells are above the current price.
| Growth \ Discount | 8.4% | 9.4% | 10.4% | 11.4% | 12.4% |
|---|---|---|---|---|---|
| 0.7% | 15.25 | 12.66 | 10.76 | 9.31 | 8.16 |
| 2.7% | 16.83 | 13.97 | 11.88 | 10.28 | 9.02 |
| 4.7% | 18.52 | 15.38 | 13.08 | 11.32 | 9.93 |
| 6.7% | 20.34 | 16.89 | 14.37 | 12.44 | 10.91 |
| 8.7% | 22.30 | 18.52 | 15.75 | 13.63 | 11.97 |
Track record: see the methodology page for how this model has performed historically, including its limits. Treat it as a screen, not a forecast.
Price history and fair value
No chartable saved daily price history is available for this range. The chart uses stored EODHD prices only and will appear after history is saved.
More detail: quality, peers, price history, dividends and financials
Quality score: 92 / 100
Five equal checks on reported history: profitability, cash generation, revenue growth, balance sheet and margins. It describes business quality, not whether the price is attractive.
| Profitability | 5 of 5 years profitable | 20 / 20 |
| Cash generation | free cash flow positive in 5 of 5 years | 20 / 20 |
| Growth | revenue +1.1% a year | 12 / 20 |
| Balance sheet | net debt 1.0x EBITDA | 20 / 20 |
| Margins | EBITDA margin 32% | 20 / 20 |
Peers in Communication Services
Same-sector companies with a valuation, most undervalued first. Compare the margin of safety, yield and quality score side by side.
| Company | Price | Margin of safety | P/E | P/B | Yield | Quality |
|---|---|---|---|---|---|---|
| PSON.L (this company) | GBP 12.81 | 2.1% | 25.2 | 2.3 | 1.9% | 92 |
| VOD.L Vodafone Group Public Limited Company | GBP 1.17 | 56.7% | – | 0.7 | 3.2% | 66 |
| DTE.DE Deutsche Telekom AG | EUR 25.87 | 49.7% | 14.4 | 2.1 | 5.5% | 82 |
| PUB.PA Publicis Groupe S.A. | EUR 102.60 | 42.0% | 15.7 | 2.5 | 3.5% | 90 |
| CMCSA Comcast | USD 24.95 | 39.1% | 7.9 | 1.0 | 5.4% | 82 |
| TEF.MC Telefonica, S.A. | EUR 3.36 | 33.8% | – | – | 8.9% | 59 |
| INF.L Informa plc | GBP 8.40 | 23.0% | – | 1.9 | 2.4% | 66 |
| SONY Sony Group Corporation | USD 27.54 | 19.5% | – | – | – | 82 |
| EMBRAC-B.ST Embracer Group AB | SEK 95.44 | 18.5% | – | 1.0 | – | 56 |
| Peer median | 14.4 | 1.5 | ||||
Dividends
Paid in the last 12 months: GBP 0.00 per share · yield 0.02% at the current price.
| Year | Dividends per share |
|---|---|
| 2026 (so far) | 0.003 |
| 2025 | 0.002 |
| 2024 | 0.002 |
| 2023 | 0.002 |
| 2022 | 0.002 |
| 2021 | 0.002 |
Annual financial statement
Saved annual report · Fiscal year 2025 · EODHD annual statements · period ended 31 Dec 2025
| Revenue | GBP 3,577,000,000 |
|---|---|
| EBITDA | GBP 1,127,000,000 |
| EBIT | GBP 632,000,000 |
| Net income | GBP 335,000,000 |
| Free cash flow | GBP 661,000,000 |
| Capital expenditures | GBP 29,000,000 |
| Debt | GBP 1,481,000,000 |
| Cash | GBP 333,000,000 |
| Working capital | GBP 1,159,000,000 |
| Shares outstanding | 660,300,000 |
| Reported dividends per share | GBP 0.2423 |