The Pearson (LSE: PSON) share price fell 4% right this moment (29 July) after the FTSE 100 training firm posted its interim outcomes for the six months to 30 June.

Nonetheless, at 1,004p, the share price is greater than double the place it was in 2020 in the course of the darkish days of the pandemic. Long run, it’s been hit or miss, rising 21% in 5 years however falling 11% over a decade.

Right here, I’ll take into account whether or not I’d be focused on shopping for this Footsie inventory.

The outcomes are in…

Within the first half, Pearson reported gross sales of £1.75bn. That was down 7% from the 12 months earlier than, however up 2% on an underlying foundation when stripping out disposals. Underlying adjusted working revenue grew 4% to achieve £250m, whereas free money stream elevated by £77m to £27m.

The agency mentioned every of its 5 divisions carried out consistent with expectations:

• Evaluation & {Qualifications} gross sales grew 2%
• Digital Studying declined 1% on account of contract losses
• Greater Schooling fell 2%
• English Language Studying rose 11%, with sturdy development at Pearson Check of English (PTE) and Mondly (a language studying app)
• Workforce Abilities gross sales grew 6%, helped by sturdy efficiency at Credly (a digital credentialing platform)

Administration reiterated steering for the complete 12 months and 2025. That will signify flat top-line development in 2024 and a slight enhance subsequent 12 months. Nonetheless, income ought to rise by double-digits because the agency advantages from effectivity financial savings.

In the meantime, a 6% enhance within the interim dividend was proposed, and 81% of a £200m share buyback programme was accomplished, as of 30 June.

Pivot to the longer term

We’re continuously listening to in regards to the doable mass lack of jobs to AI. So, I’m focused on training firms, as these may expertise vital development by serving to employees retrain with new expertise and {qualifications}.

The irony is that I worry AI may additionally disrupt the training platforms themselves. I’ve lengthy been bearish on Chegg, a US digital studying rival to Pearson. College students are more and more utilizing free AI bots like ChatGPT for solutions moderately than paying for subscription companies. That genie is properly and actually out of the bottle!

Nonetheless, Pearson is a extra diversified firm, providing textual content books, assessments and certifications, and studying platforms. I don’t see any proof of ChatGPT-shaped disruption within the numbers right this moment. Nevertheless it may turn out to be extra of a danger to elements of the enterprise in future.

CEO Omar Abbosh truly sees AI changing into a strong tailwind: “Significant demographic shifts and rapid advances in AI will be important drivers of growth in education and work over the coming years, and this plays to Pearson’s strengths as a trusted provider of learning and assessment services.”

Cut price territory?

The inventory is buying and selling at round 16 occasions ahead earnings — consistent with its historic common. So it’s hardly a cut price, but in addition not costly. The dividend yield is 2.2%.

I discovered the H1 gross sales efficiency underwhelming. Long run although, I’m now contemplating whether or not Pearson may be the best-placed agency to learn from potential job disruptions brought on by AI. I’m .