Pearson plc provides learning materials, technologies, assessments, and services for teachers and students worldwide. The company is also a global leader in computer-based testing for high-stakes certification and licensure exams in the healthcare, finance, information technology, academic and admissions markets. The company was founded in 1844 and is based in London, United Kingdom.
PSO Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Pearson Plc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Pearson Plc ranked in the 28th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. The most interesting components of our discounted cash flow analysis for Pearson Plc ended up being:
Its compound free cash flow growth rate, as measured over the past 5.02 years, is -0.08% -- higher than only 15.95% of stocks in our DCF forecasting set.
Pearson Plc's effective tax rate, as measured by taxes paid relative to net income, is at 0 -- greater than merely 0% of US stocks with positive free cash flow.
The weighted average cost of capital for the company is 7. This value is greater than only 20.97% stocks in the Consumer Cyclical sector that generate free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of Pearson Plc? See DNKN, IGT, AXL, SERV, and XELB.
Pearson (PSO) is up 6.7% in NYSE trading, hitting a two-week high, with Goldman Sachs highlighting not-so-bad preliminary figures for higher-education enrollment. Early data from the National Student Clearinghouse Research Center shows undergraduate enrollment for the fall is down 2.5% - better than the drop in the high single digits...