Pearson PLC (PSON) - 2023 Trading Update.

[idpickering]

Highlights
Underlying Group revenue growth1 of 5%, excluding OPM2 and the Strategic Review3 businesses, with particularly strong performances in Pearson VUE and Pearson Test of English.

Full year Group adjusted operating profit guidance upgraded by c.£20m to £570m - £575m at £:$ of 1.24. Current Vuma consensus is £552m at £:$ of 1.244.

Initiated £300m share buyback programme.

We are hosting an investor seminar focused on our Assessment & Qualifications business on Monday 6th November at the New York Stock Exchange.

Andy Bird, Pearson's Chief Executive, said:

"This third quarter performance illustrates the continuing momentum across our businesses, led by Pearson VUE and Pearson Test of English. Our Higher Education business reported as expected and remains on plan to return to growth next year. We've received positive initial feedback from our Generative AI tools and are evolving our AI capabilities to create further opportunities to maximise the potential of our trusted, proprietary content and data sets. I would like to thank every employee for supporting me over the last three years and creating a period of sustained growth and strategic progress. Pearson is well positioned for the next stage of its growth and development and poised to take advantage of long-term future opportunities."

https://www.investegate.co.uk/announcem ... te/7992456

Also posted on Company News here; viewtopic.php?p=624014#p624014

Although I don't hold these myself I know some hereabouts do, so this may be of interest here.

ian.

[Arborbridge]

Highlights
Underlying Group revenue growth1 of 5%, excluding OPM2 and the Strategic Review3 businesses, with particularly strong performances in Pearson VUE and Pearson Test of English.

Full year Group adjusted operating profit guidance upgraded by c.£20m to £570m - £575m at £:$ of 1.24. Current Vuma consensus is £552m at £:$ of 1.244.

Initiated £300m share buyback programme.

We are hosting an investor seminar focused on our Assessment & Qualifications business on Monday 6th November at the New York Stock Exchange.

Andy Bird, Pearson's Chief Executive, said:

"This third quarter performance illustrates the continuing momentum across our businesses, led by Pearson VUE and Pearson Test of English. Our Higher Education business reported as expected and remains on plan to return to growth next year. We've received positive initial feedback from our Generative AI tools and are evolving our AI capabilities to create further opportunities to maximise the potential of our trusted, proprietary content and data sets. I would like to thank every employee for supporting me over the last three years and creating a period of sustained growth and strategic progress. Pearson is well positioned for the next stage of its growth and development and poised to take advantage of long-term future opportunities."

https://www.investegate.co.uk/announcem ... te/7992456

Also posted on Company News here; viewtopic.php?p=624014#p624014

Although I don't hold these myself I know some hereabouts do, so this may be of interest here.

ian.

It's been a slow fight back - the share price is still off the price I nearly sold out at nearly ten years ago. How time flies!
Nearly sold out because the company had so radically changed itself and was not what I had invested in. TR 3.8% and increasing dividends since then, though still well down on what they were at a time when Luni labelled Pearson as "absteemious" in their low payout.

Arb.

[idpickering]

It's been a slow fight back - the share price is still off the price I nearly sold out at nearly ten years ago. How time flies!
Nearly sold out because the company had so radically changed itself and was not what I had invested in. TR 3.8% and increasing dividends since then, though still well down on what they were at a time when Luni labelled Pearson as "absteemious" in their low payout.

Arb.

Thanks for your input Arb. I dumped them some time ago for much the reasons you've mentioned.

Ian.

[Arborbridge]

It's been a slow fight back - the share price is still off the price I nearly sold out at nearly ten years ago. How time flies!
Nearly sold out because the company had so radically changed itself and was not what I had invested in. TR 3.8% and increasing dividends since then, though still well down on what they were at a time when Luni labelled Pearson as "absteemious" in their low payout.

Arb.

Thanks for your input Arb. I dumped them some time ago for much the reasons you've mentioned.

Ian.

I didn't think it was a very HYP-like thing to do at that time as they hadn't ceased paying dividends.

[daveh]

Thanks for your input Arb. I dumped them some time ago for much the reasons you've mentioned.

Ian.

I didn't think it was a very HYP-like thing to do at that time as they hadn't ceased paying dividends.

But if they changed beyond all recognition from what you bought and they didn't look as if they were going to be a stable income share then selling seems very reasonable. I know I find the sell decision much harder than buying.

[Arborbridge]

I didn't think it was a very HYP-like thing to do at that time as they hadn't ceased paying dividends.

But if they changed beyond all recognition from what you bought and they didn't look as if they were going to be a stable income share then selling seems very reasonable. I know I find the sell decision much harder than buying.

Two ifs there, but only one had a known answer at that time. The HYP gambit would be to hold for ever unless the dividends fail with no hope of resumption. There was no real HYP case for selling Pearson, so I didn't.

As for your second "if", although the yield is low and the share would not now be selected. it has never fallen below my self imposed limits, and since the cut the dividend and share price have both been recovering. There was no case for selling at any point as a result of your second "if", in my view. One might even say this is a classic case of a company "healing" itself.

If the yield drops to below 2% for a sustained period, then Pearson would be on my sell radar.

Arb.

[kempiejon]

I know I find the sell decision much harder than buying.

Me too so I avoid it.

since the cut the dividend and share price have both been recovering. There was no case for selling at any point as a result of your second "if", in my view. One might even say this is a classic case of a company "healing" itself.

They're still in my portfolio because of my answer to daveh above but that's the beauty of HYP, you don't have to do anything. Surprisingly (or so it would appear) some of the shares selected have fluctuations in share prices and dividends distributed. Which I can mostly ignore.

[micrographia]

One might even say this is a classic case of a company "healing" itself.

If the yield drops to below 2% for a sustained period, then Pearson would be on my sell radar.

Arb.

Like others I sold PSON after they slashed the divi in 2017 and decided to become a completely different company to the one I'd bought. Worth remembering that they were one of THE stalwart HYP shares that had never previously cut their divi, so as an income share they lost a lot of trust. Can't say I regret it - I made a small profit on the sale and their yield was middling, so I was able to replace the lost portfolio income fairly easily. Wouldn't say they were a classic example of a share healing itself though. The SP has been bumbling along so I'd still be in profit if I'd held. However, even 6 years later the income they pay out hasn't reached half of what it was and there has been a bit of inflation since then.

I appreciate that we all have our foibles, but suggesting they would become sellable if the yield went below 2% for a while seems a little bit arbitrary. They have been bumping along the 2.25% line for a bit. Is the extra £2.50 annual income for every £1k invested really that influential? A genuine question, not a criticism.
EEM

[Arborbridge]

One might even say this is a classic case of a company "healing" itself.

If the yield drops to below 2% for a sustained period, then Pearson would be on my sell radar.

Arb.

Like others I sold PSON after they slashed the divi in 2017 and decided to become a completely different company to the one I'd bought. Worth remembering that they were one of THE stalwart HYP shares that had never previously cut their divi, so as an income share they lost a lot of trust. Can't say I regret it - I made a small profit on the sale and their yield was middling, so I was able to replace the lost portfolio income fairly easily. Wouldn't say they were a classic example of a share healing itself though. The SP has been bumbling along so I'd still be in profit if I'd held. However, even 6 years later the income they pay out hasn't reached half of what it was and there has been a bit of inflation since then.

I appreciate that we all have our foibles, but suggesting they would become sellable if the yield went below 2% for a while seems a little bit arbitrary. They have been bumping along the 2.25% line for a bit. Is the extra £2.50 annual income for every £1k invested really that influential? A genuine question, not a criticism.
EEM

Interesting points of view. As regards the 2%, one could say it is arbitrary but if one set's up a system, one may as well stick with it. I've never heard you complain to TJH than 2% is arbitrary when he sells a share below that point, so why argue it with me? - he has been doing it for decades.

And the same point with regard to the original decision to keep Pearson - are you running a HYP or not? There was no HYP-reason to sell Pearson as the dividend was not cancelled for the forseeable future (off hand, I think that was the only reason acknowledged by Stephen Bland for voluntarily selling), only reduced. I readily admit to making none-HYP decisions occasionally, but we are have failures of courage, information or judgment from time to time, but in this case I will not accept a criticism for following the HYP guielines properly.

And as for saying this is not a case of a company re-healing itself - you are wrong. It's been increasing its dividend and the shareprice has been also increasing. The facts are there.

Arb.

[micrographia]

Like others I sold PSON after they slashed the divi in 2017 and decided to become a completely different company to the one I'd bought. Worth remembering that they were one of THE stalwart HYP shares that had never previously cut their divi, so as an income share they lost a lot of trust. Can't say I regret it - I made a small profit on the sale and their yield was middling, so I was able to replace the lost portfolio income fairly easily. Wouldn't say they were a classic example of a share healing itself though. The SP has been bumbling along so I'd still be in profit if I'd held. However, even 6 years later the income they pay out hasn't reached half of what it was and there has been a bit of inflation since then.

I appreciate that we all have our foibles, but suggesting they would become sellable if the yield went below 2% for a while seems a little bit arbitrary. They have been bumping along the 2.25% line for a bit. Is the extra £2.50 annual income for every £1k invested really that influential? A genuine question, not a criticism.
EEM

Interesting points of view. As regards the 2%, one could say it is arbitrary but if one set's up a system, one may as well stick with it. I've never heard you complain to TJH than 2% is arbitrary when he sells a share below that point, so why argue it with me? - he has been doing it for decades.

And the same point with regard to the original decision to keep Pearson - are you running a HYP or not? There was no HYP-reason to sell Pearson as the dividend was not cancelled for the forseeable future (off hand, I think that was the only reason acknowledged by Stephen Bland for voluntarily selling), only reduced. I readily admit to making none-HYP decisions occasionally, but we are have failures of courage, information or judgment from time to time, but in this case I will not accept a criticism for following the HYP guielines properly.

And as for saying this is not a case of a company re-healing itself - you are wrong. It's been increasing its dividend and the shareprice has been also increasing. The facts are there.

Arb.

Thanks for the reply - again, I wasn't criticising, just interested in the reasoning. I'm still holding VOD for example!

EEM

[tjh290633]

Interesting points of view. As regards the 2%, one could say it is arbitrary but if one set's up a system, one may as well stick with it. I've never heard you complain to TJH than 2% is arbitrary when he sells a share below that point, so why argue it with me? - he has been doing it for decades.

And the same point with regard to the original decision to keep Pearson - are you running a HYP or not? There was no HYP-reason to sell Pearson as the dividend was not cancelled for the forseeable future (off hand, I think that was the only reason acknowledged by Stephen Bland for voluntarily selling), only reduced. I readily admit to making none-HYP decisions occasionally, but we are have failures of courage, information or judgment from time to time, but in this case I will not accept a criticism for following the HYP guielines properly.

And as for saying this is not a case of a company re-healing itself - you are wrong. It's been increasing its dividend and the shareprice has been also increasing. The facts are there.

Arb.

Thanks for the reply - again, I wasn't criticising, just interested in the reasoning. I'm still holding VOD for example!

EEM

I held on to Pearson when they reduced their dividends. I am still holding Vodafone. The first share that I sold because the yield fell below 2% was Whitbread early in this century. I think that you have to be guided by your gut feel. If holding on makes you feel uneasy, then sell.

Another share that has reduced it's dividends is Tate & Lyle. I don't feel the need to sell out. My two lowest yield are Haleon and IMI. Both are below 2%, but I am in no hurry to sell. IMI has been my best performing share and has been trimmed back a number of times. There is no good reason to sell.

TJH

[kempiejon]

Another share that has reduced it's dividends is Tate & Lyle. I don't feel the need to sell out. My two lowest yield are Haleon and IMI. Both are below 2%, but I am in no hurry to sell. IMI has been my best performing share and has been trimmed back a number of times. There is no good reason to sell.

I was inclined to look at Tate the other day, 3% yield and an intention to increase pay out from the new level but not relevant for new funds. They were passed over for new money in my HYP when the dividend was static for a few years, when I sold my unsheltered shares they were not replaced in the ISA so now a much smaller than average holding. Longer term I might tidy my holdings and I'll need a plan with these smaller legacy holdings. Twist or fold?
As for IMI I have them too but not part of my HYP. You say no reason to sell but they did cut in 2020 and only offer 1.5% currently. As your best performing share I'd also say there was never a good reason to trim. I understand your reasoning around portfolio balance and trimming into better yields will increase income. I like the eternity model of holding duration.

[Arborbridge]

Another share that has reduced it's dividends is Tate & Lyle. I don't feel the need to sell out. My two lowest yield are Haleon and IMI. Both are below 2%, but I am in no hurry to sell. IMI has been my best performing share and has been trimmed back a number of times. There is no good reason to sell.

I was inclined to look at Tate the other day, 3% yield and an intention to increase pay out from the new level but not relevant for new funds. They were passed over for new money in my HYP when the dividend was static for a few years, when I sold my unsheltered shares they were not replaced in the ISA so now a much smaller than average holding. Longer term I might tidy my holdings and I'll need a plan with these smaller legacy holdings. Twist or fold?
As for IMI I have them too but not part of my HYP. You say no reason to sell but they did cut in 2020 and only offer 1.5% currently. As your best performing share I'd also say there was never a good reason to trim. I understand your reasoning around portfolio balance and trimming into better yields will increase income. I like the eternity model of holding duration.

I think your attitude is refreshing - that there are still some people who hold to the "almost eternal" holding for HYP is encouraging. I'm not sure if there are many like you on this board now - many of us seem to have gone a little floppy on that side of the guidelines. I try to hold to them, but don't always manage to do so.

Arb.

[Gersemi]

I think your attitude is refreshing - that there are still some people who hold to the "almost eternal" holding for HYP is encouraging. I'm not sure if there are many like you on this board now - many of us seem to have gone a little floppy on that side of the guidelines. I try to hold to them, but don't always manage to do so.

Arb.

Well remember that those that don't trade very much probably don't post very much. Part of my investments is an HYP, but other than transferring some holdings to an ISA, I barely trade. My last sale was in May, to sell a small rump holding of First Group PLC, left over from participating in the tender offer in December 2021 (these haven't paid a dividend in years) - I purchased these shares in 2010 & 2011. Previous to that my last voluntary sale was in November 2009 (half my holding in Anglo American, they had also stopped paying dividends at the time).

[Arborbridge]

I think your attitude is refreshing - that there are still some people who hold to the "almost eternal" holding for HYP is encouraging. I'm not sure if there are many like you on this board now - many of us seem to have gone a little floppy on that side of the guidelines. I try to hold to them, but don't always manage to do so.

Arb.

Well remember that those that don't trade very much probably don't post very much. Part of my investments is an HYP, but other than transferring some holdings to an ISA, I barely trade. My last sale was in May, to sell a small rump holding of First Group PLC, left over from participating in the tender offer in December 2021 (these haven't paid a dividend in years) - I purchased these shares in 2010 & 2011. Previous to that my last voluntary sale was in November 2009 (half my holding in Anglo American, they had also stopped paying dividends at the time).

It's a shame you don't post more. With such a pure approach, your results might be interesting - but I'm guessing your style may be not that interested in keeping to many records!

Arb.

[ax1709cjm]

I've held Pearson since 2008 by the looks of things (top ups in 2001 and 2016 apparently). I'm slightly in profit, and I've had over half my investment back as dividends. XIRR seems to give an answer of 5%. So, hardly a fantastic share to hold, but not a disaster either...

[kempiejon]

I think your attitude is refreshing - that there are still some people who hold to the "almost eternal" holding for HYP is encouraging. I'm not sure if there are many like you on this board now - many of us seem to have gone a little floppy on that side of the guidelines. I try to hold to them, but don't always manage to do so.

I do find it really easy to stick to the holding rules, just resist thoughts of doing something, which I've been doing long enough to be easy.
My HYP was done several years ago and has had no new money, I do reinvest dividends. I did some selling to tidy my unsheltered income producing assets. Soon, when drawdown comes, I'll set dividends to pay away and then there's only corporate actions to indulge.

[ElectronicFur]

Like others I sold PSON after they slashed the divi in 2017 and decided to become a completely different company to the one I'd bought.

I held on as I figured that the HYP thing to do was to trust the management knew what they were doing with regards to the changes. OK, that didn't work out so well, but I'm always cautious of just dumping a holding because a company is changing radically; history has shown that is not always a bad thing. Nokia moved from being a paper mill to rubber boots, electricity generation, cables, networking & mobiles.

[miner1000]

I still have Pearson along with a few others like Centrica, who after some buying at the lows are now showing a profit. PSON is well in the red though. I have never bought more because unlike CNA they are not a monopoly. I rarely sell. BP after the Macondo thingy, I immediately replaced them with Shell. And Numis Securities last year because they got bought by Deutcher Bank. I immediately replaced Numis with TP ICAP. Otherwise, I don’t think I have sold a share in 20 years. No complaints. The TR is satisfactory. Miner

[Arborbridge]

I still have Pearson along with a few others like Centrica, who after some buying at the lows are now showing a profit. PSON is well in the red though. I have never bought more because unlike CNA they are not a monopoly. I rarely sell. BP after the Macondo thingy, I immediately replaced them with Shell. And Numis Securities last year because they got bought by Deutcher Bank. I immediately replaced Numis with TP ICAP. Otherwise, I don’t think I have sold a share in 20 years. No complaints. The TR is satisfactory. Miner

Nice to hear from you on one of your rare appearances A true long term HYPer.


Arb