|Bid||7.56 x 2200|
|Ask||7.57 x 3200|
|Day's Range||7.54 - 7.63|
|52 Week Range||7.28 - 12.22|
|Beta (5Y Monthly)||-0.52|
|PE Ratio (TTM)||7.48|
|Forward Dividend & Yield||0.24 (3.19%)|
|Ex-Dividend Date||Aug 14, 2019|
|1y Target Est||7.00|
(Bloomberg Opinion) -- The club of U.K. takeover targets that never get bought has an undisputed leader — Pearson Plc. But the logic of taking the troubled educational publisher private now looks stronger than it has for some time. The company’s defenses could scarcely be weaker, and there’s a plausible recovery strategy to be built amid the wreckage.The firm has been clobbered by the digitization of U.S. college textbooks. That continues, with Pearson shares falling as much as 14% on Thursday following another grim trading update. Management has been repeatedly caught out by the pace at which students are abandoning physical books in favor of renting digital coursework, while taking advantage of the marketplace provided by Amazon.com Inc. to buy and sell any necessary hard copies second-hand.The validity of the excuse — Pearson sells via campus bookstores, placing it one step removed from student trends — is becoming irrelevant. The longstanding chief executive officer and chief financial officer are both leaving soon, and the decline in physical textbooks has been so precipitous that it’s nearly completely done.Private equity’s existing caution toward Pearson has been vindicated by a fall in market value exceeding 60% since early 2015. There’s been another problem, too. Management has been doing a lot of the restructuring that a buyout firm would have plotted, taking out roughly 1 billion pounds ($1.3 billion) of costs. Meanwhile, the imperative to invest in digital capability has constrained the ability to take on much debt.There is doubtless more cost to take out. But it’s hard to see Pearson primarily as an attractive restructuring opportunity. The bolder strategy would be to use the reconfigured business as a platform to grow by acquisition and add other growth channels. An obvious hunting ground would be the education technology sector spawned by the venture capital industry.Pearson would still be big for a leveraged buyout. Add estimated year-end net debt, plus a 25% takeover premium to its market value, and a deal would cost nearly 6 billion pounds. Still, the balance sheet is in good condition. Net debt is forecast to end the year at less than the group’s 730 million pounds of forecast Ebitda. At academic publisher Relx Plc, it was 2.5 times Ebitda at the half-year. Pearson could arguably take on more borrowing if it were in private hands. While its U.S. high education business, around one-quarter of group sales, is yet to bottom out, the rest of the company is a mixture of flat-lining and expanding businesses growing at a collective low-single-digit rate. The capital-expenditure burden appears to have peaked as well.A deal would still probably require a jumbo equity check, involving potentially more than one sponsor. But gearing could come later through further M&A.Pearson has proved things can always get worse before they get better: A take-out must still be merely possible rather than probable. But with the shares trading at a noticeable discount to larger peers, it invites attention. And with a management vacuum opening up, its ability to rebuff an approach is weak. Chairman Sidney Taurel’s task of appointing new leadership has taken on a fresh urgency.To contact the author of this story: Chris Hughes at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The result were in line with expectations, which were lowered in September when the company warned of a weaker-than-expected performance in its key U.S. higher-education segment.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Pearson Plc shares fell as much as 14% after the world’s largest education company forecast another drop in demand for U.S. college textbooks and said its chief financial officer will leave.Sales of U.S. higher education course materials -- the source of successive profit warnings in recent years -- fell 12% in 2019 as students switched to online learning and rented books instead, Pearson said in a statement. It sees continued “heavy declines in print” this year.“Students are now moving from print to digital far more quickly,” Chief Executive Officer John Fallon, who is stepping down later this year, told reporters on a call. “That gets us to the future stage of the business more quickly, but it is painful in the year it happens.”Pearson said CFO Coram Williams will be replaced by Deputy Chief Financial Officer Sally Johnson. Shore Capital analyst Roddy Davidson said the departure of both the CEO and CFO point to a period of uncertainty and lost momentum.Pearson CEO Sells Remaining Penguin Stake as He Steps DownPearson’s shares have lurched lower since a September profit warning blamed on weak revenue from U.S. universities. The sales slump has worsened since then, with no recovery in sight.“The U.S. higher education expectations are materially worse than previously expected,” said Alex DeGroote, an independent media analyst. “It’s just more of the same, more downgrades. This is a stock that’s stuck in a downgrade cycle.”Pearson’s shares were down 10% as of 9:38 a.m. in London, bringing their drop in the last 12 months to 40%, compared to an 11% gain in Britain’s FTSE 100 Index. The stock touched its lowest since October 2008.Fallon said the process to replace him is ongoing, with both internal and external candidates being considered.The U.S. textbook slump has raised questions over his decision to sharpen Pearson’s focus on education by selling other businesses including fiction publishing and news during his seven years in charge.The continued slump in U.S. college courseware, which accounts for almost a quarter of Pearson’s sales, shows the challenge for whoever succeeds him. Some analysts say the new CEO may slash prices to stem the drop.The company said more than half of U.S. college students now prefer an ebook to a physical book and campus bookstores are buying less inventory.What Bloomberg Intelligence Says:“Pearson’s lackluster 2020 revenue outlook suggests management is still unable to call the bottom in revenue-growth trends, with the speed and extent of print declines uncertain in a market moving faster than it expected.”\--John Davies, BI analystClick here to read the researchPearson said it expects to have earned 590 million pounds ($769 million) in adjusted operating profit last year, or 580 million pounds after adjusting for currency swings -- slightly above the 578 million pound average of 10 analyst estimates.With other parts of the business such as testing and professional certification mostly growing, it forecast a wide range for 2020 adjusted operating profit -- from 500 million to 580 million pounds.(Updates with profit warning context)\--With assistance from Kit Rees.To contact the reporter on this story: Joe Mayes in London at email@example.comTo contact the editors responsible for this story: Rebecca Penty at firstname.lastname@example.org, Thomas Pfeiffer, Jennifer RyanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
European shares ended higher on Thursday after the signing of a long anticipated Phase 1 U.S.-China trade deal lifted some level of near-term uncertainty, while disappointing earnings dragged down London shares. "Investors are maybe not selling on the fact but just pausing for thought that the deal has been signed which is also a source of relief for most people," said Russ Mould, investment director at broker AJ Bell. The pan-European STOXX 600 index closed up 0.2%, with London's main index lagging its continental peers.
Investing.com - Here is a summary from the most important regulatory news releases from the London Stock Exchange ahead of the UK market open on Thursday 16 January. Please refresh for updates for UK market news from the LSE’s RNS on individual UK shares from FTSE 100, FTSE 250 and FTSE All-Share.
Concurrently, Moody's has affirmed the company's Baa1 long-term issuer rating, the Baa1 senior unsecured ratings, the (P)Baa1 senior unsecured MTN programme rating, the Baa3 junior subordinated notes rating and the P-2 short term issuer rating. The rating action follows Bertelsmann's announcement of the proposed acquisition from Pearson plc (Baa2, Stable) of the remaining 25% equity stake in book publisher Penguin Random House ("PRH", unrated) that it did not already own for a total consideration of USD675 million, equivalent to an estimated EV/EBITDA multiple of around 6.5x.The company plans to fund this acquisition with a mix of liquidity and short term financing.
EUROPE MARKETS European stocks were cautious on Wednesday as investors remained concerned over a hard Brexit. The Stoxx 600 (XX:SXXP) edged 0.1% higher, sitting below the record highs of Monday, while the German DAX (DX:DAX) nudged 0.
Does Pearson PLC (NYSE:PSO) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to […]
Have you ever wondered what the toughest exams in the world are all about, and perhaps how tough they are? Aside from the tests that life will force you to go through, the pursuit of scholarly excellence will also continuously have you doing exams that are designed to gauge your progress. The education sector is […]
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Today we are going to look at Pearson plc (LON:PSON) to see whether it might be an attractive investment prospect...
Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don't make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the […]
Today we will run through one way of estimating the intrinsic value of Pearson plc (LON:PSON) by estimating the...