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what it is
Pearson sells tests, courseware, and learning services to schools, colleges, and workers in the UK, US, Canada, and beyond.
how it gets paid
Last year Pearson made $8.1B in revenue. Assessment & Qualifications was the main engine at $2.0B, or 45% of sales.
what just happened
Pearson printed $0.32 EPS versus $0.40 expected.
At a glance
B+ balance sheet — decent shape, but not bulletproof
55/100 earnings predictability — expect surprises
17.7x trailing p/e — the market's not buying it — or you found a deal
2.6% dividend yield — cash in your pocket every quarter
10.0% return on capital — nothing to write home about
xvary composite: 57/100 — below average
What they do
Pearson sells tests, courseware, and learning services to schools, colleges, and workers in the UK, US, Canada, and beyond.
Assessment & Qualifications was 45% of 2024 sales. That means your dollars are tied to exams and certifications, not a one-time textbook sale. Pearson runs five segments, so leaving means replacing several services, not one product.
How they make money
$8.1B
annual revenue
Assessment & Qualifications
$2.0B
Higher Education
$1.0B
Virtual Learning
$0.6B
English Language Learning
$0.5B
Workforce Skills
$0.3B
The products that matter
textbooks and courseware
Higher Education
$1.9B · 23% of revenue
it's the largest named segment at $1.9B, and at 23% of revenue it still anchors the legacy Pearson story.
largest named segment
online courses and training
Virtual Learning
$1.1B · 14% of revenue
this $1.1B business is 14% of revenue, which makes it important enough to matter but not big enough to carry the whole company.
digital exposure
professional exam delivery
Pearson VUE
450+ test centers
Pearson VUE runs 450+ test centers and sits inside the assessment engine that represented roughly 47% of first-half revenue. That's one of the steadier pieces of the business.
sticky contracts
Key numbers
17.7x
trailing p/e
You are paying 17.7 times trailing earnings while sales are projected to fall 1%. That is a steady price for a shrinking forecast.
31.0%
operating margin
Pearson keeps 31 cents of each dollar before interest and taxes. That is why the stock can look boring and still work.
2.6%
dividend yield
You get 2.6% back in cash while you wait. That is real income, just not enough to cover much drama.
$1.4B
long-term debt
Debt of $1.4B is 13% of capital. That is not a red flag, but it keeps the balance sheet from feeling effortless.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 85 / 100
- long-term debt $1.4B (13% of capital)
- net profit margin 12.6% — keeps 13 cents of every dollar in revenue
- return on equity 12% — $0.12 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in PSO 3 years ago → it's now worth $13,380.
The index would have given you $13,920.
source: institutional data · total return
What just happened
missed estimates
Pearson printed $0.32 EPS versus $0.40 expected.
That was a 20.0% miss. Revenue was still $4.5B on a trailing basis, so the business is large even when quarterly profit stumbles.
$2.0B
revenue
$0.32
eps
20.0%
surprise
EPS surprise
The 20% miss mattered more than the $0.32 print. It says profits are still uneven even with $4.5B in revenue.
-
pearson plc probably closed out 2025 with mixed results.
-
we think second-half sales increased at a mid-single-digit rate compared to the previous-year tally.
-
management noted that underlying group sales increased 4% in the three-month period ended september 30th, but expects stronger growth in the final stanza of the year.
-
the assessment & qualifications division, which represented roughly 47% of first-half revenues, likely posted a low- to mid-single-digit rise in the top line.
-
that group has been benefiting from several key contract renewals for the u.s.
source: Yahoo Finance consensus, 2026
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What could go wrong
the #1 risk is mid-single-digit growth failing to show up after the CFO handoff.
med
CFO transition execution
Group CFO Sally Johnson departs in May 2026. You are handing a margin-led story to a new finance chief at the exact moment the market wants cleaner growth proof.
If execution slips, the 17.2% operating margin can move back toward 16.9% fast.
med
growth target miss
Pearson is guiding investors toward mid-single-digit sales growth. Reported sales grew 4%, so there is not much room for disappointment.
If growth stays around 4%, a 17.7x earnings multiple starts to look full rather than fair.
med
testing contract dependence
Assessment & Qualifications represented roughly 47% of first-half revenue, and management specifically flagged key U.S. contract renewals. That concentration cuts both ways.
A lost or repriced contract would hit one of the most stable parts of the revenue base.
If revenue stays near 4% while the market waits for mid-single digits, Pearson is left defending a 17.2% operating margin story on a 17.7x multiple.
source: institutional data · regulatory filings · risk analysis
Pay attention to
the number
sales growth above 4%
This is the simplest test on the page. If reported growth cannot move above 4%, the mid-single-digit narrative starts to look like marketing copy.
calendar
may 2026 CFO transition
Leadership changes matter more in margin stories than growth stories. Watch the first update under the new finance chief.
margin trend
17.2% operating margin
Pearson got from 16.9% to 17.2%. If that line flattens or slips, EPS growth loses its easiest support.
contract risk
testing renewals in the U.S.
Management already told you renewals matter. For a business where assessment made up roughly 47% of first-half revenue, this is not background noise.
Analyst rankings
earnings predictability
55 / 100
in human-speak, this is a business with some stability and some noise. You should not expect perfectly smooth quarters.
price stability
85 / 100
the stock price has been steadier than the average name. That does not make the business risk-free — it just means the tape is calmer.
risk rank
3
Pearson sits around the middle of the pack on safety. Safer than a speculative growth stock, less insulated than the highest-quality defensives.
source: institutional data
Institutional activity
86 buyers vs. 90 sellers in 3q2025. total institutional holdings: 21.0M shares.
source: institutional data
Price targets
3-5 year target range
$12
$22
$14
current price
$17
target midpoint · +21% from current · 3-5yr high: $25 (+75% · 17% ann'l return)
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