McGraw-Hill Companies Earnings Preview

Motley Fool Staff
Updated

McGraw-Hill Companies (NYS: MHP) will try to beat its earnings estimates for the fifth consecutive quarter. The company will unveil its latest earnings on Thursday, Oct. 20. McGraw-Hill produces a range of information products and services for the education, financial services, and business information markets.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back McGraw-Hill Companies, with six of eight rating it a buy and the remainder rating it a hold. Analysts like McGraw-Hill Companies better than competitor Reed Elsevier overall. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.

  • Revenue Forecasts: On average, analysts predict $2.05 billion in revenue this quarter. That would represent a rise of 3.5% from the year-ago quarter.

  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $1.23 per share. Estimates range from $1.20 to $1.27.

What our community says:
CAPS All-Stars are solidly behind the stock with 88.7% giving it an "outperform" rating. The community at large concurs with the All-Stars, with 90.8% awarding it a rating of "outperform." Fools are keen on McGraw-Hill Companies and haven't been shy with their opinions lately, logging 179 posts in the past 30 days. McGraw-Hill Companies' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
McGraw-Hill Companies' profit has risen year over year by an average of 7.9% over the past five quarters. Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

61.6%

59.7%

61.4%

63.6%

Operating Margin

22.7%

16.7%

18.6%

31.4%

Net Margin

13.4%

9.4%

10.1%

19.2%

One final thing: If you want to keep tabs on McGraw-Hill Companies movements, and for more analysis on the company, make sure you add it to your Watchlist.

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