Forecast

Financial forecast

Project revenue, EBITDA, net income and free cash flow for the next 5 or 10 years. Growth starts at the same rate the valuation uses and fades to the long-run rate, with margins held at today's level. Bear and bull cases move growth by the company's own revenue volatility. It is a model of what the assumptions imply, not a prediction.

Pearson plc (PSON.L)

Price updated 06 Nov 2026 09:56; Fiscal year 2025; Annual financials downloaded 06 Nov 2026 13:36.

Starts from Fiscal year 2025 financials in GBP and a share price of GBP 12.81. Growth begins at 4.7% a year (the valuation's blended assumption) and fades to 2.9% by year 10. Margins held at EBITDA 31.5%, net 9.4%, free cash flow 18.5% of revenue. Bear and bull move starting growth by 6.0 points and long-run growth by 1 point.

Margins drift toward their 5-year average over 5 years (free cash flow), because today's margin is far above the company's own average.
Year 1 uses analyst consensus revenue growth (5.4%); year 2 is halfway back to the model's own path.
GBP 13.08Model fair value (Free-cash-flow DCF); range GBP 9.36 to GBP 19.60
2%Fair value vs today's price
LowModel confidence
25%Share of the gap to fair value the price closes by year 5

Confidence: Earnings-based DCF disagrees strongly; annual data only; profit and cash flow steady for 3 years; value is more than 1.5x the Earnings-based DCF value.

5.5%/yrModel-implied annual total return over 10 years, base case (price plus dividends). Raw model level; the screener shows a calibrated ranking instead
GBP 5.25BRevenue in year 10 (base)
GBP 491.43MNet income in year 10 (base)
GBP 707.71MFree cash flow in year 10 (base)
GBP 0.36Dividend per share in year 10 (base)
GBP 18.89Implied share price in year 10 (base), today GBP 12.81
8.4%Year-10 free cash flow per share vs today's price

Free cash flow over time

GBP 0 GBP 246.52M GBP 493.04M GBP 739.56M GBP 986.08M FY2020 FY2022 FY2024 Fiscal year 2025 +1 +3 +5 +7 +9 +10
Solid: reported Dashed: base projection Shaded: bear to bull range
Free cash flow in year 10 by scenario
CaseStarting growthYear 10Annual growth
Bear -0.6% GBP 500.94M -2.7%
Base 5.4% GBP 707.71M 0.7%
Bull 11.4% GBP 986.08M 4.1%

Base case by year

YearGrowthRevenueEBITDANet incomeFree cash flowEPSFCF / shareDividend / shareBook / shareImplied price
Fiscal year 2025– GBP 3.58BGBP 1.13BGBP 335.00MGBP 661.00M 0.511.000.245.5212.81
Year 15.4% GBP 3.77BGBP 1.19BGBP 352.96MGBP 658.80M 0.531.000.265.8013.51
Year 24.9% GBP 3.95BGBP 1.25BGBP 370.36MGBP 651.80M 0.560.990.276.1014.19
Year 34.3% GBP 4.12BGBP 1.30BGBP 386.28MGBP 638.65M 0.590.970.286.4014.82
Year 44.1% GBP 4.29BGBP 1.35BGBP 402.12MGBP 621.96M 0.610.940.296.7215.44
Year 53.9% GBP 4.46BGBP 1.41BGBP 417.80MGBP 601.68M 0.630.910.307.0516.06
Year 63.7% GBP 4.63BGBP 1.46BGBP 433.26MGBP 623.94M 0.660.940.317.3916.65
Year 73.5% GBP 4.79BGBP 1.51BGBP 448.43MGBP 645.78M 0.680.980.327.7517.24
Year 83.3% GBP 4.95BGBP 1.56BGBP 463.22MGBP 667.09M 0.701.010.348.1217.81
Year 93.1% GBP 5.10BGBP 1.61BGBP 477.58MGBP 687.77M 0.721.040.358.4918.36
Year 102.9% GBP 5.25BGBP 1.65BGBP 491.43MGBP 707.71M 0.741.070.368.8818.89

EPS and free cash flow per share assume today's share count. Dividends assume today's payout ratio and book value grows with retained earnings. The implied share price follows the valuation models and is not a price target; override growth settings do not change the model fair value. Margins stay at today's level except where the notes say they drift toward their average, so it does not model margin expansion, buybacks, acquisitions or recessions. It is for information and education only and is not investment advice. See the methodology for how the growth rate is blended.