Pearson’s (PSON) shares jump 6% on upped profit outlook: Buy alert?

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Pearson’s (PSON) shares jump 6% on upped profit outlook: Buy alert?

 Pearson’s (PSON) shares jump 6% on upped profit outlook: Buy alert?
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Highlights 

  • Pearson’s shares jumped almost 6 per cent on Wednesday after the group’s FY 2021 profit estimates exceeded expectations.
  • The group estimates its full year adjusted operating profit to be around £385 million compared to analyst expectations of about £375 million.

Education group Pearson PLC’s (LON: PSON) shares rose by nearly 6 per cent on Wednesday after the group announced its profit outlook ahead of expectations in its latest trading statement.

Pearson’s upped FY 2021 guidance

The group expects its full-year 2021 underlying sales growth to be about 8 per cent. And estimates its adjusted operating profit to be around £385 million (at an average USD: GBP conversion rate of 1.38). The full-year adjusted profit is about 33 per cent higher than the year before.

Moreover, the group’s full-year sales and adjusted profit expectations are both ahead of analysts’ estimates. Analysts estimated FY 2021 organic revenue growth to be around 6.7 per cent.

As per consensus analyst estimates (as of 12 November last year), FY 2021 adjusted operating profit was projected to be around £375 million (considering an average USD: GBP conversion rate of 1.38).

Pearson’s January trading statement

The group’ underlying sales growth in its Assessment & Qualifications business reported growth of 2 per cent in Q4 2021 and by 18 per cent in the full year. The 18 per cent growth was driven by its professional certificate and other areas post covid-19 recovery.

Its Virtual Learning underlying sales growth was flat in Q4 2021 and higher by 11 per cent in FY 2021, while its Higher Education business segment’s underlying sales growth was lower by 2 per cent in Q4 2021 and lower by 5 per cent in FY 2021.

At the same time, its Workforce Skills underlying sales growth jumped by 13 per cent in Q4 2021 and by 6 per cent in FY 2021. And its English Language Learning Q4 2021 underlying sales growth rose by 21 per cent, while its FY 2021 sales growth rose by 17 per cent.

The group’s consumer-focused strategy in 2021, driven by the Pearson+ app, saw significant progress. The app had around 2.75 million registered users, according to the trading update.

Pearson PLC’s (LON: PSON) share price performance

The group’s shares were trading at GBX 669.60, up by 5.85 per cent on 19 January at 09:16 AM BST. Meanwhile, the FTSE 100 index was flat at 7,562.98.

At the time of writing, Pearson was the highest riser on the index, reacting to the news.

 PSON share price and volume

Image source: Refinitiv

The group’s market cap stands at £4,786.02 million, and it has given a one-year return of 0.63 per cent as of date.

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