Why Shares of Pearson PLC Jumped Today

By Timothy GreenMarketsFool.com

What happened

Continue Reading Below

Shares ofPearson PLC (NYSE: PSO) surged on Friday after the education courseware providergave an update on its first quarter and announced various initiatives. The stock was up about 13% at 11:15 a.m. EDT.

So what

Pearson disclosed that its first-quarter sales were in line with its previous guidance, up 6% in underlying terms. The main growth drivers were North American education courseware, professional certification, online program management, South African textbooks, and U.K. student assessment.

More From Fool.com

Image source: Pearson PLC.

Pearson also left its outlook for 2017 unchanged. The company expects operating profit between 570 million pounds and 630 million pounds and adjusted EPS between 48.5 pence and 55.5 pence. More details on restructuring costs will be given when the company reports its full first-quarter results.

In addition to updating investors on its performance, Pearson disclosed that it had removed more than 650 million pounds of cost over the past four years. The company expects to further reduce costs by an addition 300 million pounds by the end of 2019, mainly in North America.

Pearson has also initiated a strategic review of its U.S. K-12 courseware publishing business, which has suffered from a slow pace of digital adoption, high capital intensity, and a competitive environment. It is also in talks to potentially sell its 47% stake in Penguin Random House.

Now what

Pearson CEO John Fallon commented on the company's first quarter and its strategic moves:

Shares have tumbled nearly 50% over the past three years as profits turned to losses. Investors pushed up the stock on Friday, hoping that the company is now on the right path to turning itself around.

10 stocks we like better than PearsonWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Pearson wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of May 1, 2017

Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.