Discounted Cash Flow

Pearson Plc. ADR

PSO · Based on 10 years of SEC filings

Average annual growth rates

Metric 10-Year 5-Year 3-Year
Sales
Free Cash Flow
Average (FCF & NI)
Net Income

Average annual growth is the mean year-over-year change across each period.

Endpoint CAGR (better for long term trend)

Metric 10-Year 5-Year 3-Year
Sales
Free Cash Flow
Average (FCF & NI)
Net Income

Endpoint CAGR is the compound annual rate from the first to last year in each period.

Projections use average year-over-year growth. Change this in Settings.

Projected growth rate

Free cash flow growth
10-year: — 5-year: — 3-year: —
Averaged growth (FCF & NI)
10-year: — 5-year: — 3-year: —
Net income growth
10-year: — 5-year: — 3-year: —
Sales growth (not added to calculations)
10-year: — 5-year: — 3-year: —

Click a greyed-out slider to switch metrics. Slide between the 10-year, 5-year, and 3-year historic growth rates for FCF, net income, or their average.

%
%

Historical inputs (10 fiscal years)

YEAR Sales Net Income Free Cash Flow Net Margin EPS (diluted)
2016 $4.6b $-2.3b $18.0m -51.3% $-2.87
2017 $4.5b (-0.9%) $406.0m (117.4%) $298.0m (1555.6%) 9.0% (117.5%) $0.50 (117.4%)
2018 $4.1b (-8.5%) $588.0m (44.8%) $462.0m (55.0%) 14.2% (58.3%) $0.76 (51.5%)
2019 $3.9b (-6.3%) $264.0m (-55.1%) $317.0m (-31.4%) 6.8% (-52.1%) $34.00 (4397.4%)
2020 $3.4b (-12.2%) $310.0m (17.4%) $383.0m (20.8%) 9.1% (33.7%) $41.00 (20.6%)
2021 $3.4b (0.9%) $159.0m (-48.7%) $326.0m (-14.9%) 4.6% (-49.2%) $0.21 (-99.5%)
2022 $3.8b (12.0%) $242.0m (52.2%) $214.0m (-34.4%) 6.3% (35.8%) $32.80 (15445.0%)
2023 $3.7b (-4.3%) $378.0m (56.2%) $399.0m (86.4%) 10.3% (63.3%) $0.53 (-98.4%)
2024 $3.6b (-3.3%) $434.0m (14.8%) $503.0m (26.1%) 12.2% (18.8%) $0.65 (21.5%)
2025 $3.6b (0.7%) $335.0m (-22.8%) $522.0m (3.8%) 9.4% (-23.4%) $0.51 (-20.3%)

Base FCF: (latest fiscal year)

Discount rate: %

Terminal growth:

Projection period: years

Alt A decline yrs:

Alt B total yrs:

Values abbreviated: b = billions, m = millions, k = thousands.

Projected cash flows

Year Projected cash flow Discount Factor Present Value

PV of projected FCF:

Terminal FCF:

Terminal value:

PV of terminal value:

Enterprise value (DCF):

DCF price per share:

Current price:

Alternative DCF Models

Model Fair Value Upside PV(FCFs) PV(Terminal) Total Years
Standard (10yr→TV) 10 + TV
Alt A (Gradual Decline)
Alt B (30yr Hard Stop) N/A

This is a simplified DCF model for illustration. It uses reported free cash flow, a single growth assumption, fixed WACC, and a Gordon Growth terminal value. It is not investment advice.

+ 10YR Financials Balance Sheet (10YR) Cash Flow (10YR) DCF Model