YoY perfromance is strong, net debt was reduced due to solid cash conversions. Both indicators are positve with strong suport below.

Overview

Pearson plc is a British multinational publishing and education company. It is the largest education company and was once the biggest publisher in the world. The purpose of its business is to “add life” to a lifetime of learning. It does this by creating vibrant and enriching learning experiences for its customers which are designed for real-life impact. The company headquarters is based in the UK, London.

Financials

In 2021, Pearson plc delivered a strong group performance with an 8% sales growth and profit of £385 million. The firm recorded a lower interest charge than initially expected of £57 million and a tax charge of 20%. The EPS came in at 34.9p which was up 22% from the prior year. Cash performance was also solid with 101% operating cash conversion, as a result, net debt at the end of the year totalled £0.4 billion. Financial implications regarding the restructuring of its corporate offices incurred around £50 million, bringing the total incurred costs for the year (primarily non-cash) to £160 million. However, this generated property savings of £10 million in 2022 and it will be incorporated in the firm’s guidance £20 million thereafter.   

Technicals

From a technical outlook, Pearson’s shares are currently trading at £9.62 a share. Towards the upside, resistance levels sit at £9.67 then at £9.72 and a tough level at £9.76 (red oval). A break above the major resistance could see the stock head up towards the £10+ share price level, last seen in January 2019. Towards the downside, support levels sit at £9.48 then at £9.45 then a major support level at £9.41. A break below the major support level may see the share price slide towards £8.79 (green oval), where the next big support rests. Looking at the indicators, RSI is positive as it reads 67 and MACD is also positive. However, RSI is floating just underneath the ‘overbought’ territory.

Summary

To summarise, Pearson plc is showing strong improvements year-on-year with solid sales growth and operating profit. The company is managing to gradually reduce their net debt by increasing cash performance, if the level of performance is kept at this pace, then the business could really produce some great results in the long term. The UK-based firm has incurred some costs in 2021 due to restructures, although it has continued with substantial cost savings which have been reinvested into growth generation.