New Pearson CEO John Fallon must feel a bit like Man United’s David Moyes. Succeed a legendary manager and deal with major structural issues. The riches of United’s midfield have succumbed to age and is in need of serious restructuring but so too does Pearson’s education business.
Long the pearl asset in the group it faces huge structural or age issues as publishing moves from print to digital. Even after a profit warning in January, the market’s analysts were still pinning their 2014 profit expectations too high and suffered an Olympiakos moment today. Cue more share price carnage, down as much as 8% and continuing a dramatic fall from grace since Marjorie Scardino’s 2013 departure. The multi-year outperformance of this cash cow has evaporated leaving the share price at similar levels to 3 years ago……
As the share price dips under a tenner watch out for the dividend yield heroes pointing to an almost 5% payout. Then remember how other digital restructuring shifts have played out in the media publishing sector – music, newspapers or magazines anybody?
The next chart from ActivateAlpha will be familiar to regular readers and suggests Pearson is still quite far away from the “Opportunity” zone. The deterioration in its Composite style score/rank has been quite pronounced over the past 3 months. Bravehearts would probably want to see that composite rank begin to move from left to right before plunging into this restructuring story….
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