Upside case
Bull case
$29+90.9%
PSO would need investors to value it at roughly 42x earnings — about 20x more generous than today's 22x forward P/E. That requires meaningful multiple expansion on top of continued earnings growth.
Analysis OverviewHoldUpdated May 1, 2026
Pearson plc (PSO) Stock Analysis
Wall Street verdict, consensus price target, and analyst rating breakdown — everything needed to frame the risk/reward at today's price.
Analyst consensus
Hold
Covering
15
analysts
3 bullish · 0 bearish · 15 covering PSO
Strong Buy
0
Buy
3
Hold
12
Sell
0
Strong Sell
0
Consensus Target
$15
-4.7% vs today
Scenario Range
— – $29
Model bear to bull value window
Coverage
15
Published analyst ratings
Valuation Context
21.9x
Forward P/E · Market cap $9.6B
PSO price targets
Three scenarios for where PSO stock could go
Current
~$15
Confidence
30 / 100
Updated
May 1, 2026
Where we are now
Current · $15
Base
$21
Bull
$29
Market caseClosest to today
Base case
$21+39.0%
At 30x on FY1 earnings, the base case reflects a reasonable but not stretched valuation. It prices in continued growth without assuming an exceptional setup.
Stress case
Bear case
—
The bear case reflects a scenario where earnings shortfalls or multiple compression combine to materially reduce the stock from its current level.
Not financial advice. Model confidence reflects internal scenario assumptions, not a guarantee of returns. Past performance does not predict future results.
Pearson plc
PSO · NYSECommunication ServicesPublishingDecember year-end
Pearson is a global education company that provides digital learning content, assessments, and services. It generates revenue primarily through its Higher Education courseware (~30% of sales), Assessment & Qualifications testing services (~25%), and Workforce Skills training programs, with the rest coming from Virtual Learning and English Language Learning segments. The company's competitive advantage lies in its trusted brand recognition in education, extensive proprietary content libraries, and established relationships with educational institutions worldwide.
Market Cap
$9.6B
Revenue TTM
$7.1B
Net Income TTM
$790M
Net Margin
11.2%
PSO Revenue and Earnings Performance
Quarterly beat-or-miss track record against analyst estimates, plus forward revenue and EPS outlook for the next two fiscal years.
EPS Beat Rate
55%Exceptional
12 quarters tracked
Revenue Beat Rate
27%Exceptional
vs consensus estimates
Avg EPS Surprise
+12.4%
above Street consensus
Beat / Miss Record
BeatMissLeft = EPS · Right = Revenue
Q2 2024
Q3 2024
Q1 2025
Q1 2026
Last 4 Quarters
EPS beats: 2 of 4Q2 2024
EPS
$0.34/$0.40
Revenue
$2.3B/$2.3B
Q3 2024
EPS
$0.29/$0.30
Revenue
$2.2B/$2.3B
Q1 2025
EPS
$0.51/$0.46
Revenue
$2.2B/$2.3B
Q1 2026
EPS
$0.53/$0.52
Revenue
$2.5B/$2.5B
| Quarter | EPS (Actual / Est) | EPS Surprise | Revenue (Actual / Est) | Rev Surprise |
|---|---|---|---|---|
| Q2 2024 | $0.34/$0.40 | -15.9% | $2.3B/$2.3B | -3.3% |
| Q3 2024 | $0.29/$0.30 | -3.1% | $2.2B/$2.3B | -2.5% |
| Q1 2025 | $0.51/$0.46 | +11.1% | $2.2B/$2.3B | -0.1% |
| Q1 2026 | $0.53/$0.52 | +1.1% | $2.5B/$2.5B | -1.1% |
FY1–FY2 Estimates
Revenue Outlook
FY1
$6.5B
-8.5% YoY
FY2
$6.4B
-1.1% YoY
EPS Outlook
FY1
$1.13
-3.9% YoY
FY2
$1.19
+5.2% YoY
Trailing FCF (TTM)$1.1B
FCF Margin: 16.1%
Next Earnings
—
Expected EPS
—
Expected Revenue
—
PSO beat EPS estimates in 2 of 4 tracked quarters. Mixed delivery makes the upcoming report a key data point for re-rating.
PSO Revenue Breakdown by Segment
Product and geographic revenue mix from the latest annual disclosure, with year-over-year growth by segment.
Latest disclosure
FY 2020
Total disclosed revenue $2.7B
Product Mix
Latest annual revenue by segment or product family
Segment breakdown not available for this company.
Geographic Mix
Latest annual revenue by reported region
UNITED STATES
87.2%
-3.4% YoY
Tap, hover, or focus a slice to inspect segment detail.
UNITED STATES is the largest reported region at 87.2%, down 3.4% YoY.
PSO Valuation Snapshot
Current multiples compared to the S&P 500, the company's sector, and its own five-year average.
Relative Value Signal
Fairly Valued
Fair value est. $15 — implies -0.3% from today's price.
Premium to Fair Value
0.3%
above fair value
Deep DiscountFair ValueVery Expensive
vs S&P 500 Trailing P/E
PSO
17.8x
vs
S&P 500
25.2x
30% discount
vs Communication Services Trailing P/E
PSO
17.8x
vs
Communication Services
15.5x
+14% premium
vs PSO 5Y Avg P/E
Today
17.8x
vs
5Y Average
28.4x
37% discount
Forward PE
21.9x
S&P 500
19.1x
+15%
Communication Services
13.1x
+68%
5Y Avg
—
—
Trailing PE
17.8x
S&P 500
25.2x
-30%
Communication Services
15.5x
+14%
5Y Avg
28.4x
-37%
PEG Ratio
1.35x
S&P 500
1.75x
-22%
Communication Services
0.66x
+105%
5Y Avg
—
—
EV/EBITDA
7.5x
S&P 500
15.3x
-51%
Communication Services
8.7x
-14%
5Y Avg
9.8x
-23%
Price/FCF
14.1x
S&P 500
21.3x
-34%
Communication Services
11.6x
+22%
5Y Avg
28.2x
-50%
Price/Sales
2.0x
S&P 500
3.1x
-36%
Communication Services
1.0x
+90%
5Y Avg
2.3x
-14%
Dividend Yield
2.04%
S&P 500
1.88%
+8%
Communication Services
3.38%
-40%
5Y Avg
1.89%
+8%
| Metric | PSO | S&P 500 | Communication Services | 5Y Avg PSO |
|---|---|---|---|---|
| Forward PE | 21.9x | 19.1x+15% | 13.1x+68% | — |
| Trailing PE | 17.8x | 25.2x-30% | 15.5x+14% | 28.4x-37% |
| PEG Ratio | 1.35x | 1.75x-22% | 0.66x+105% | — |
| EV/EBITDA | 7.5x | 15.3x-51% | 8.7x-14% | 9.8x-23% |
| Price/FCF | 14.1x | 21.3x-34% | 11.6x+22% | 28.2x-50% |
| Price/Sales | 2.0x | 3.1x-36% | 1.0x+90% | 2.3x-14% |
| Dividend Yield | 2.04% | 1.88% | 3.38% | 1.89% |
PSO trades above S&P 500 benchmarks on 1 of 6 measured multiples — appears modestly priced relative to the S&P 500 on most measures.
Forward P/E and PEG reflect analyst consensus estimates. Historical averages use trailing ratios where forward data is unavailable.S&P 500 and sector benchmarks both use trailing median P/E — similar readings indicate the broader index and sector are priced alike.
Open valuation toolPSO Financial Health
Verdict
Strong
PSO generates $1.1B in free cash flow at a 16.1% margin — returns 7.1% of market cap to shareholders annually.
Cash Engine
Revenue, margins, and cash generation
Revenue (TTM)
Trailing-twelve-month sales base
$7.1B
Revenue Growth
TTM vs prior year
-6.4%
Gross Margin
Gross profit as a share of revenue
51.0%
Operating Margin
Operating income divided by revenue
14.8%
Net Margin
Net income divided by revenue
11.2%
EPS (TTM)
Diluted earnings per share, trailing twelve months
$1.18
Free Cash Flow (TTM)
Cash generation after capex
$1.1B
FCF Margin
FCF as share of revenue — the primary cash quality signal
16.1%
Capital Quality
ROIC, leverage, and debt serviceability
ROIC
Return on invested capital — primary competitive quality signal
8.3%
ROA
Return on assets, trailing twelve months
12.7%
Cash & Equivalents
Liquid assets on the balance sheet
$543M
Net Debt
Total debt minus cash
$929M
Debt Serviceability
Net debt as a multiple of annual free cash flow
0.8× FCF
~0.8 years to full repayment at current FCF run-rate
ROE *
Return on equity, trailing twelve months
21.9%
* Elevated by buyback-compressed equity — compare ROIC (8.3%) for an undistorted picture of capital efficiency.
Shareholder Returns
How capital is returned to owners
Total shareholder yield
7.1%
Dividend
2.0%
Buyback
5.1%
Share Repurchases
Trailing buyback outflow — dollar magnitude of capital returned
$358M
Dividend / Share
Annualized trailing dividend per share
$0.23
Payout Ratio
Share of earnings distributed as dividends
35.9%
Shares Outstanding
Declining as buybacks retire shares
684M
All figures from the trailing twelve months. ROIC uses invested capital (equity + net debt). ROE marked * where buyback-compressed equity base may inflate the figure.
Open full ratios pagePSO Stock Risk Factors
Key factors that could pressure the stock price, compress the multiple, or weigh on future results.
AI analysis · updated April 29, 2026
High Risk
Circular Debt
Circular debt is a significant issue within Pakistan's energy sector, severely impacting PSO's financial health and liquidity. The company has substantial receivables blocked in this circular debt, which affects its budget and leads to deficits.
High Risk
Import Dependency & Price Volatility
PSO's heavy reliance on imports makes it vulnerable to fluctuations in global oil prices. Any disruptions in the supply chain can significantly impact its operational costs and profitability.
High Risk
High Debt Levels
Historically, PSO has maintained a high level of debt, which can exert pressure on its financial performance. This elevated debt level poses a risk, especially in a volatile economic environment.
Medium
Currency Devaluation
The Pakistani Rupee (PKR) is subject to devaluation against the US Dollar (USD), which can adversely affect PSO's import costs and overall financial performance. Such currency fluctuations can lead to increased operational expenses.
Medium
Sales Tax Exemptions
Exemptions on sales tax for petroleum products result in higher receivables and liquidity challenges for PSO. Although temporary relief measures are in place, a long-term resolution is necessary to stabilize cash flow.
Medium
Competitive Pressures
The oil marketing sector in Pakistan is highly competitive, with numerous players offering discounts. Stagnant dealer margins amid rising oil prices can negatively affect PSO's profitability.
Lower
Economic Conditions
Unfavorable macroeconomic conditions, including economic downturns and rising fuel prices, can lead to decreased consumer demand for petroleum products. This decline can be exacerbated by unlawful imports impacting the formal sector.
Lower
Regulatory Oversight
As a major player in the oil marketing sector, PSO is subject to regulatory oversight that can influence its operations and profitability. Changes in regulations may impose additional compliance costs.
Lower
Operational Costs
Maintaining a vast distribution network across Pakistan incurs high operational costs. These costs can impact profitability, especially in a competitive market.
These are risk mechanisms, not predictions. The key question is which would force a cut to earnings estimates or a lower multiple than the market currently prices in.
Why PSO Stock Could Outperform
Structural drivers behind the upside case and why the stock could outperform over the next 12 months.
AI analysis · updated April 29, 2026
Digital Transformation and AI Integration
Pearson is actively leveraging AI to enhance its products and services, aiming for increased efficiency and margin expansion. This includes AI-driven tools for teachers and language tutoring, positioning the company to capitalize on the growing demand for personalized and adaptive learning solutions.
Growth in Key Segments
The Enterprise Skilling and Early Careers segments are identified as significant multi-year growth drivers. These segments benefit from recurring, contract-based revenues and strategic technology partnerships, with the Enterprise Learning & Skills segment expected to achieve high single-digit growth.
Margin Expansion and Profitability
Pearson has demonstrated a consistent expansion of operating margins, moving from 9% to 17% over five years. Adjusted operating profit has grown, outpacing revenue growth, with further margin improvement guided for the future.
Financial Health and Valuation
The company is noted for generating strong free cash flows and maintaining a solid balance sheet. Valuation metrics suggest the stock may be undervalued, trading at reasonable levels relative to its history and sector peers.
Dividend Payout
Pearson offers a dividend yield that is considered meaningful and sustainable, with a payout ratio that indicates the company can maintain or increase its dividend.
Market Position
Pearson holds strong positions in standardized testing and clinical assessments, with a significant market share in North American medical licensing exams. The company is also expanding into new enterprise partnerships.
A real bull case compounds — each driver matters most when it strengthens margins, supports capital returns, and keeps the company above the market's minimum growth bar simultaneously.
PSO Stock Price Performance
52-week range context and price returns across multiple time horizons. Dividend contribution is shown separately in the Capital Return section.
Current Price
$15.22
52W Range Position
69%
52-Week Range
Current price plotted between the 52-week low and high.
52-Week Low
$12.02
+26.6% from the low
52-Week High
$16.67
-8.7% from the high
1 Month
+14.18%
3 Month
+24.14%
YTD
+11.1%
1 Year
-3.9%
3Y CAGR
+14.2%
5Y CAGR
+5.7%
10Y CAGR
+2.5%
Range context matters because valuation compression and earnings misses rarely hit from the same starting point. A stock already far below its high can still fall, but it is no longer carrying the same embedded optimism as one pressing a fresh peak.
PSO vs Peers
Valuation, growth, and margin comparison against the closest publicly traded peers for this company.
Peer Set
Accurate peer set
Forward PE
21.9x
vs 14.1x median
+55% above peer median
Revenue Growth
-8.5%
vs +4.2% median
-304% below peer median
Net Margin
11.2%
vs 10.2% median
+9% above peer median
| Company | Mkt Cap | Fwd PE | Rev Grw | Margin | Rating | Upside |
|---|---|---|---|---|---|---|
PSO PSO Pearson plc | $9.6B | 21.9x | -8.5% | 11.2% | Hold | -4.7% |
SCH SCHL Scholastic Corporation | $966M | 22.0x | +1.3% | 3.9% | Hold | — |
STR STRA Strategic Education, Inc. | $1.8B | 10.9x | +4.2% | 10.2% | Buy | +10.7% |
PRD PRDO Perdoceo Education Corporation | $2.1B | 11.9x | +13.1% | 18.9% | Hold | -12.0% |
LOP LOPE Grand Canyon Education, Inc. | $4.5B | 16.3x | +12.3% | 26.9% | Buy | +10.8% |
CHG CHGG Chegg, Inc. | $130M | — | -29.8% | -26.9% | Hold | +2522.4% |
This peer comparison reflects companies with similar business models, product lines, or market positioning, supplemented by industry grouping when direct matches are limited.
PSO Dividend and Capital Return
PSO returns capital mainly through $358M/year in buybacks (5.1% buyback yield), with a modest 2.04% dividend — combining for 7.1% total shareholder yield. The dividend has grown for 6 consecutive years.
Dividend SustainableFCF Well Covered
Total Shareholder Yield
7.1%
Dividend + buyback return per year
Buyback Yield
5.1%
Dividend Yield
2.04%
Payout Ratio
35.9%
How PSO Splits Its Return
Div 2.04%
Buyback 5.1%
Dividend 2.04%Buybacks 5.1%
Dividend Profile
Yield, cadence, and growth quality
Dividend / Share
Trailing annualized cash dividend
$0.23
Growth Streak
Consecutive years of dividend increases
6Y
3Y Div CAGR
6.5%
5Y Div CAGR
5.3%
Ex-Dividend Date
—
Payment Cadence
Semi-Annual
2 payments over the last 12 months
Buyback Engine
How much per-share support comes from repurchases
Repurchases (TTM)
Cash used for buybacks in the latest trailing period
$358M
Estimated Shares Retired
24M
Approx. Share Reduction
3.4%
Shares Outstanding
Current diluted share count from the screening snapshot
684M
At 3.4%/year, buybacks mechanically lift EPS even with flat earnings — each remaining share represents a slightly larger piece of the company.
| Year | Div / Share | YoY Grw | BB Yield | Total Yield |
|---|---|---|---|---|
| 2026 | $0.23 | — | — | — |
| 2025 | $0.33 | +10.9% | — | — |
| 2024 | $0.29 | +9.8% | 3.2% | 4.7% |
| 2023 | $0.27 | -0.9% | 2.5% | 4.3% |
| 2022 | $0.27 | -2.0% | 4.7% | 6.5% |
FAQ
7 questionsPSO Investor Questions
Common questions answered from live analyst data and company financials.
01Is Pearson plc (PSO) stock a buy or sell in 2026?
Pearson plc (PSO) is rated Hold by Wall Street analysts as of 2026. Of 15 analysts covering the stock, 3 rate it Buy or Strong Buy, 12 rate it Hold, and 0 rate it Sell or Strong Sell. The consensus 12-month price target is $15, implying -4.7% from the current price of $15.
02What is the PSO stock price target for 2026?
The Wall Street consensus price target for PSO is $15 based on 15 analyst estimates. The high-end target is $18 (+18.3% from today), and the low-end target is $11 (-27.7%). The base case model target is $21.
03Is Pearson plc (PSO) stock overvalued in 2026?
PSO trades at 21.9x times forward earnings. The stock currently trades at a discount to the broader market. Based on current multiples versus the peer group, the relative model signals fairly valued. Whether the stock is over or undervalued ultimately depends on whether consensus earnings estimates are achievable.
04What are the main risks for Pearson plc (PSO) stock in 2026?
The primary risks for PSO in 2026 are: (1) Circular Debt — Circular debt is a significant issue within Pakistan's energy sector, severely impacting PSO's financial health and liquidity. (2) Import Dependency & Price Volatility — PSO's heavy reliance on imports makes it vulnerable to fluctuations in global oil prices. (3) High Debt Levels — Historically, PSO has maintained a high level of debt, which can exert pressure on its financial performance. Each factor has the potential to pressure earnings or compress the stock's valuation multiple.
05What is Pearson plc's revenue and earnings forecast?
Analyst consensus estimates PSO will report consensus revenue of $6.5B (-8.5% year-over-year) and EPS of $1.13 (-3.9% year-over-year) for the upcoming fiscal year. The following year, analysts project $6.4B in revenue.
06When does Pearson plc (PSO) report its next earnings?
A confirmed upcoming earnings date for PSO is not yet available. Check the Earnings section above for the most recent quarterly report dates and forward estimates.
07How much free cash flow does Pearson plc generate?
Pearson plc (PSO) generated $1.1B in free cash flow over the trailing twelve months — a free cash flow margin of 16.1%. PSO returns capital to shareholders through dividends (2.0% yield) and share repurchases ($358M TTM).