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Pearson

PSO
49
Publishing · Communication Services
Price
$16.92
+0.03 (+0.18%)
Market Cap
$10.16B
Exchange
New York Stock Exchange
Winston Score
49
Winston is serious
Mixed quality — meaningful strengths and weaknesses.

Share count falling — buybacks

13.0% over 4y

The company has reduced its share count over this period, returning value to shareholders through buybacks.

Diluted shares outstanding: 759.1M (2021) → 660.3M (2025)

Pearson is a British education company that makes textbooks, online courses, and learning software used by students and teachers around the world. Its main products include digital learning platforms, standardized tests, and academic content sold to schools, universities, and individual learners. Pearson is one of the largest education publishers in the world and owns well-known testing programs like GED and Pearson VUE.

Pearson makes money by selling digital subscriptions, print and digital textbooks, and charging fees for professional certification exams. It operates globally but earns most of its revenue in North America and the UK, with annual revenue around $4 billion. Its large library of educational content and its role running high-stakes tests give it some switching-cost advantages, but the shift away from print textbooks toward cheaper digital alternatives and open educational resources remains a significant long-term pressure on its traditional publishing business.

Winston Score History

Score breakdown

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Quality

Gross Margin
52.9%
Healthy — 52.9% gross margin
Operating Margin
14.8%
Healthy — 14.8% operating margin
ROCE
5.8%
Weak — 5.8% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales YoY
-5.3%
Shrinking sales (-5.3% YoY)
EPS YoY
+33.7%
Earnings growing fast (33.7% YoY)

Earnings growing 25%+ a year. The compounder zone.

EPS Consistency
4/8 quarters
Earnings inconsistent quarter-to-quarter

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Cash Flow

Cash Conversion
169%
Turns 169% of profit into real cash
FCF Margin
16.0%
Converts sales into free cash efficiently (16.0%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity
0.29
Conservative — low debt load (0.29)
Interest Cover
4.71x
Adequate interest coverage (4.7x)

Interest coverage between 3 and 8. Profits cover interest several times over.

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Valuation

P/E Ratio (TTM)
14.7x
Attractive valuation — P/E 14.7

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward
-6.8
SLOWING
Earnings expected to fall — forward P/E higher than today

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Dividends

Dividend Yield
2.03%
Moderate income — 2.03% yield

Standard yield zone for stable dividend payers. A meaningful piece of total return.

Dividend Growth
+20.9%
Dividend growing fast (20.9% YoY)

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