Pearson PLC

Pearson PLC maintains a conservative capital structure with a debt-to-equity ratio of 0.41 and a current ratio of 2.0, indicating adequate short-term liquidity coverage. The company holds total assets of £6.46 billion against total liabilities of £2.81 billion, resulting in total equity of £3.65 billion. Long-term debt stands at £1.48 billion. While the current ratio suggests strong immediate liquidity, the risk assessment flags medium liquidity risk and notes that net cash is negative after subtracting total debt, implying reliance on operating cash flows to service obligations.

Profitability metrics show a return on equity (ROE) of 9.18% and a return on assets (ROA) of 5.19%. The company generated £3.58 billion in revenue, with a gross profit of £1.86 billion, resulting in a gross margin of approximately 52%. Operating income was £507 million, leading to a net income of £335 million. These returns reflect a moderate efficiency in utilizing equity and assets to generate profits, consistent with a mature services business model.

Segment and geographic data are not explicitly detailed in the provided financial snapshot, but the classification under Diversified Consumer Services suggests a broad exposure to consumer-facing educational and professional services. The revenue base of £3.58 billion indicates a significant scale in its operations. Without specific segment breakdowns, the revenue concentration risk cannot be precisely quantified, but the diversified nature of the industry classification implies a spread across multiple service lines.

Growth trajectory analysis is limited by the absence of historical period data in the input. The current revenue of £3.58 billion and net income of £335 million provide a baseline for current performance. Free cash flow stands at £261 million, derived from operating cash flow of £656 million less capital expenditures of £134 million. This positive free cash flow generation supports the company's ability to maintain operations and service debt without immediate external financing.

Risk factors include medium liquidity risk and low dilution risk. The key flag regarding negative net cash after debt subtraction highlights a potential vulnerability in cash management, requiring careful monitoring of operating cash flows. The low dilution risk suggests that the company is not currently engaging in significant equity issuance that would erode shareholder value. The absence of high-risk flags in the risk assessment provides some reassurance regarding immediate financial stability.

Recent events include analyst estimates with a mean price target of £1,181.44 and a median target of £1,130.00. The mean recommendation is 2.45, indicating a moderate buy sentiment among analysts, with one strong buy, four buys, and six holds. No specific news events or filing observations were provided that impact the current financial assessment, aside from the analyst consensus which reflects market expectations for future performance.

Net income grew at a 17.3% CAGR over four years, demonstrating strong long-term profitability expansion.

The company's cash conversion ratio of 1.96 is well above the cohort median of 1.2, highlighting robust cash generation.

Eleven analysts maintain a buy recommendation with a mean price target of 1,181.44, signaling positive market sentiment.

Revenue growth stalled at just 0.7% year-over-year, indicating limited top-line expansion in the current period.

The company faces medium liquidity risk and medium credit risk, suggesting potential financial stability challenges.

Long-term debt increased to 1.47 billion GBP in the latest fiscal year, adding to leverage concerns.

Revenue £3.58B, +0,7% YoY; Operating income −6,3% YoY.

• ▍Revenue £3.58B, +0,7% YoY
• ▍Operating income −6,3% YoY
• ▍Net income −22,8% YoY
• ▍Free cash flow −31,5% YoY
• ▍Net margin 9.4%

Revenue £3.55B, −3,3% YoY; Operating income +8,6% YoY.

• ▍Revenue £3.55B, −3,3% YoY
• ▍Operating income +8,6% YoY
• ▍Net income +14,8% YoY
• ▍Free cash flow +11,1% YoY
• ▍Net margin 12.2%

Revenue £3.67B, −4,3% YoY; Operating income +83,8% YoY.

• ▍Revenue £3.67B, −4,3% YoY
• ▍Operating income +83,8% YoY
• ▍Net income +56,2% YoY
• ▍Free cash flow +34,0% YoY
• ▍Net margin 10.3%

Revenue £3.84B, +12,1% YoY; Operating income +48,1% YoY.

• ▍Revenue £3.84B, +12,1% YoY
• ▍Operating income +48,1% YoY
• ▍Net income +36,7% YoY
• ▍Free cash flow −1,9% YoY
• ▍Net margin 6.3%

Revenue £3.43B; Operating income £183.0M.

• ▍Revenue £3.43B
• ▍Operating income £183.0M
• ▍Net margin 5.2%