Published on 20 Jun 2024 on Simply Wall St. · via Yahoo Finance
Is Pearson plc (LON:PSON) Trading At A 39% Discount?
Key Insights
The projected fair value for Pearson is UK£16.35 based on 2 Stage Free Cash Flow to EquityPearson is estimated to be 39% undervalued based on current share price of UK£9.91Our fair value estimate is 44% higher than Pearson's analyst price target of UK£11.32
Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Pearson plc (LON:PSON) as an investment opportunity by projecting its future cash flows and then discounting them to today's value. This will be done using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.