Yahoo Finance Does Pearson plc’s (LON:PSON) Recent Track Record Look Strong?
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After reading Pearson plc’s (LON:PSON) latest earnings update (31 December 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether PSON has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
See our latest analysis for Pearson
Did PSON’s recent earnings growth beat the long-term trend and the industry?
PSON recently turned a profit of UK£588m (most recent trailing twelve-months) compared to its average loss of -UK£138.9m over the past five years.
In terms of returns from investment, Pearson has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 7.7% exceeds the GB Media industry of 5.4%, indicating Pearson has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Pearson’s debt level, has increased over the past 3 years from 4.4% to 5.0%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 40% to 17% over the past 5 years.
What does this mean?
Though Pearson’s past data is helpful, it is only one aspect of my investment thesis. While Pearson has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Pearson to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for PSON’s future growth? Take a look at our free research report of analyst consensus for PSON’s outlook.
Financial Health: Are PSON’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
