Pearson revenues rise but US enrolments hit by Covid
Education publisher Pearson reported a rise in revenues as growth in assessment and qualifications offset lower US higher education enrolments due to Covid-19 infections.
Group underlying profit for the or the nine months to September 30 rose 10% compared with a 17% increase in the first half against tougher comparatives. Pearson said it was on track to meet full-year expectations and added that 2 million people had registered for its new US learning app as it looked to move into the direct-to-consumer market beyond schools and colleges.
"While no market data for the full back to school period is available as yet, Pearson's internal analysis indicates a decline in enrolments, particularly in community colleges, following a surge in COVID-19 infections in the key back to school period, and a strengthening of the U.S. labour market," it said.
US Higher Education Courseware fell 9%, while Pearson's Virtual Learning was up 14%, reflecting enrolment growth at Virtual Schools.
Keith Bowman, analyst at interactive investor, said the pandemic had accelerated the company’s existing move online and extended to target consumers directly, and beyond students attending schools and colleges.
"Business disposals have helped reduce group net debt and an estimated forward dividend yield of over 2.5% is not to be sniffed at in an era of ultra-low interest rates," he said.
"However, some impact from the pandemic is still being felt, while the company’s record for transformations is arguably patchy. "
"An estimated price/earnings ratio above the three- and 10-year averages, even after a significant decline in share price since the summer peak, also suggests the shares are not obviously cheap. For now, and given the company’s ongoing transition, analyst consensus opinion currently points to a 'hold'.”