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 […]

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Pearson plc...

The main aim of stock picking is to find the market-beating stocks. But the main game is to find enough winners to...

(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 chughes89@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis 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.

Pearson plc (LON:PSON) last week reported its latest yearly results, which makes it a good time for investors to dive...

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.

This article is for investors who would like to improve their understanding of price to earnings ratios (P/E ratios...

Today we'll evaluate Pearson plc (LON:PSON) to determine whether it could have potential as an investment idea...

(Bloomberg) -- McGraw-Hill and Cengage Learning Holdings II Inc. terminated their planned merger, which would have created the second-largest provider of college textbooks and other higher-education materials.The all-stock deal, announced in May 2019, was meant to form a company with about $3.2 billion in annual revenue, but McGraw-Hill Chief Executive Officer Simon Allen said in a statement Monday that divestitures sought by the government made the combination uneconomical.The scuttled deal would have created a more robust competitor for industry leader Pearson Plc. The new company would have been in a position to pressure prices in Pearson’s key U.S. higher-education publishing market, analysts at Liberum said in a note when the merger was announced.Boston-based Cengage, which emerged from Chapter 11 bankruptcy protection in 2014, is controlled by private equity firms including Apax Partners, KKR & Co. and Searchlight Capital Partners. Its over-the-counter shares last traded in February at a market capitalization of about $785 million, a deep slide from the $7.75 billion Cengage fetched when what’s now Thomson Reuters Corp. sold it to Apax and Omers Capital Partners in 2007.New York-based McGraw-Hill is controlled by Apollo Global Management, which bought it for $2.5 billion from the former McGraw-Hill Cos. in 2012. The remaining financial business of that company is now S&P Global Inc.For 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.

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Moody's Investors Service, ("Moody's") has today changed to negative from stable the outlook on the ratings of Pearson plc ("Pearson" or "the company"). Concurrently, Moody's has affirmed the Baa2 issuer and senior unsecured ratings of Pearson and its rated subsidiaries.

John Fallon has been the CEO of Pearson plc (LON:PSON) since 2013. First, this article will compare CEO compensation...

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 […]

(Bloomberg Opinion) -- College textbooks can be expensive! The list price for the hardcover print version of N. Gregory Mankiw’s “Principles of Economics,” which I am singling out for reasons that will become apparent later, is $249.95.Textbooks have also gotten a lot more expensive over the past few decades. Prices of college textbooks are up 135% since 2001, when the Bureau of Labor Statistics began keeping track, while the overall consumer price index is up 46% and what the BLS calls “recreational books” have actually gotten a little cheaper. In the broader category of educational books and supplies, for which the BLS has price data going back to 1967, prices started rising faster than inflation in 1981 and are up almost ninefold since.This price explosion has gotten lots and lots of attention in the news media and in academia. What has gotten somewhat less attention is that, as you may be able to see in the above chart, it seems to have ended in 2016. Here’s the chart since 2001 just for college textbooks, which makes that even clearer.Economist and inveterate chart-maker Mark J. Perry of the University of Michigan at Flint and the American Enterprise Institute was among the first to pick up on this, in 2017. He speculated that the causes included the rise of new sales and rental channels, digital offerings from established publishers, and competition from newcomers such as the for-profit FlatWorld and the nonprofit OpenStax.That … sounds about right. Used-textbook sales started growing in the late 1990s thanks to eBay and Amazon.com, according to a 2014 analysis by the consulting firm McKinsey. Textbook-rental services “emerged as a mainstream option” in 2008 and rapidly gained market share. Established publishers reacted by accelerating the move to digital course materials that they effectively rent to students, usually at lower upfront cost than a textbook. But others are now providing similar offerings free: OpenStax, based at Rice University in Houston, estimates that 2.9 million students used its free digital textbooks last year. Other university-backed free-textbook efforts include the University of Minnesota’s Open Textbook Library and the Massachusetts Institute of Technology’s Open Courseware project.The National Association of College Stores’ most recent survey of student spending found that 44% of U.S. and Canadian college students rented course materials in spring 2019, while 22% downloaded free course materials — double the share who reported doing so in 2016. The survey also found that average annual student spending on textbooks and other course materials is down 31% since the 2015-2016 academic year, and 41% since 2007-2008.A different survey, by the research firm Student Monitor, found a similar decline. Textbook publishers have definitely been feeling the impact, as is clear from Pearson Plc’s stock performance since it sold off the Financial Times and the Economist in the summer of 2015 to focus on what Chief Executive Officer John Fallon predicted would be “one of the great global growth stories of the next decade.” (I use the Standard & Poor’s 500 Index as the standard of comparison here because, although it’s a British company, Pearson gets more than 60% of its revenue from the U.S.)In the U.S. market for new college course materials, Pearson had a 42.7% share in 2018, Cengage 21.8% and McGraw-Hill Education 15.9%, according to research firm Simba Information. That’s their share of revenue, and thus doesn’t reflect the inroads made by free textbooks. The fact that all three saw significant declines in college-course-materials revenue in 2018 (6.5% for Pearson, 5.8% for Cengage and 8.5% for McGraw-Hill, estimates Simba) presumably does reflect those inroads.Cengage and McGraw-Hill are both owned by private-equity firms, which is why they’re not included in the above stock chart. They are also in the midst of consummating a merger, which is opposed by various organizations that say this will give them the leverage to jack up prices. A market of which the top two players control a combined 80% would in fact be quite concentrated, but given that publishers are struggling and prices falling, is this really something to worry about?The answer depends on how durable you think the challengers to the publishers’ business model are. The resale and rental markets seem doomed as textbook delivery shifts to digital, which leaves mainly the university-backed free-digital-textbook providers. The aforementioned Greg Mankiw, a Harvard professor whose textbook has been the introductory-economics market leader for quite a while, professes to be skeptical of their staying power. “The current for-profit educational publishers are not that profitable,” he wrote in an essay last year, “and there is no reason to think that a non-profit entity would find cost savings that have eluded existing publishers.”He has a point about the profitability. Even before the textbook-rental services started making inroads, the major textbook publishers usually had operating-profit margins in the single digits. Textbook prices would appear to have gone up not so much because of price gouging but because producing them has gotten more expensive, a trend exacerbated on a per-copy basis by the downward pressure used copies and rentals have exerted on new-textbook sales. Given that the prices of other books have fallen, though, one does suspect that textbook publishers have chosen especially inefficient and costly ways to go about their business. If frequent updates and revisions, colorful graphics and other gewgaws are of limited educational value, maybe there is a place for nonprofit publishers that dispense with the frills. The open-textbook movement has mainly focused on introductory texts, where such an approach makes the most sense.The for-profit publishers have been reacting by offering add-on services and encouraging students to subscribe rather than buy. For example, U.S. students can access Mankiw’s “Principles of Economics” by paying $130 for six months of MindTap for Principles of Economics, which includes an online text of the book plus an array of learning tools, or $119.99 for a four-month subscription to Cengage Unlimited that includes MindTap. They can also pay $328.95 for a print copy of the book plus six months of MindTap, or $34.49 for a bare-bones four-month ebook rental.This approach seems to be working. Pearson reported last month that “underlying revenue” held steady in 2019 for the first time since 2014, with CEO Fallon — who will be leaving later this year — telling analysts and investors in a call that the shift to digital, while it has been “challenging,” was finally starting to pay off:For Pearson, longer term, it means a more sustainable business as we build direct relationships with 10 million plus learners who pay us directly to use our products.It’s those “direct relationships” with students that have some in higher education most worried. “They have direct access to student wallets,” says Nicole Allen, director of open education at the Scholarly Publishing and Academic Resources Coalition. “What could go wrong?” Sparc, which counts more than 200 colleges and universities as members, is one of the groups fighting the merger of Cengage and McGraw-Hill, and Allen has been urging member institutions to make sure the contracts they sign with publishers limit the ability “to gather and control data on students.” Also key to avoiding overdependence on publishers, she says, is the ability of universities to build and maintain an alternative, open(ish) infrastructure for course materials.A lot of the early open-textbook efforts have been funded by foundation grants, which tends not to be a sustainable model. Rice’s OpenStax, founded by professor of electrical and computer engineering Richard Baraniuk, has started generating revenue by licensing its free textbooks to for-profit publishers to be included in their courseware platforms, while also developing a rival platform for which it charges $10 per student per course. “History shows that when you have an open, freewheeling ecosystem, innovation happens faster and things become more efficient,” Baraniuk told education-tech publication EdSurge last year.That sounds encouraging. But it’s also worth noting that American universities don’t exactly have a great track record of keeping costs down for students. Remember that statistic about the prices of educational books and supplies rising ninefold since 1981? Average undergraduate tuition and fees at U.S. colleges and universities are up almost tenfold since then.To contact the author of this story: Justin Fox at justinfox@bloomberg.netTo contact the editor responsible for this story: Stacey Shick at sshick@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”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.

Is Pearson plc (LON:PSON) a good dividend stock? How can we tell? Dividend paying companies with growing earnings can...

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.

Let's see if Pearson (PSO) stock is a good choice for value-oriented investors right now from multiple angles.

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy […]

Readers hoping to buy Pearson plc (LON:PSON) for its dividend will need to make their move shortly, as the stock is...