Pearson - Comparative Multiple Analysis

Pearson (Comparative Multiple Analysis)


Notes on the Comparative Multiple Analysis of Pearson

WikiWealth compares Pearson's revenue, EBITDA, and EBIT multiples to their peers in order to determine the appropriate fair valuation. Click in the top right corner to experiment with Pearson's comparative analysis.

Notes from the analysis:

1. WikiWealth uses quantitative measures to determine the multiple range for Pearson.
2. Free cash flow to the firm (FCF) multiple is free cash flow to equity holders plus interest owed to Pearson's debt holders.
3. Multiples incorporate benefits due to economies of scale; WikiWealth compares absolute enterprise value multiples to competitor's multiples.
4. WikiWealth excludes outliers when calculating individual company multiples.

Helpful Information for Pearson's Analysis

How does this work? The Comparative Investment Analysis determines the value of Pearson by comparing Pearson financial ratios, prices, growth rates, margins, etc. to those of relevant peer groups.

Value Investing Importance? This method is widely used by investment professionals to determine the correct price of investments, especially initial public offerings (IPOs). It is one element of WikiWealth's three Wall Street approaches used to determine the correct fair value of Pearson.

See the Pearson cash flow (DCF) analysis for a completely different approach that's popular on Wall Street for determining the value of an investment in Pearson.

Also, see the Pearson's buffett intrinsic valuation analysis for WikiWealth's attempt to replicate the investing formula's used by Warren Buffett and Pearson's valuation conclusion for a quick summary.