The McGraw-Hill Companies Inc
), a publisher and provider of financial information and media
services, is slated to report its fourth-quarter 2011 financial
results on January 31, 2012. The current Zacks Consensus Estimate
for the quarter is 57 cents per share. Revenue as per the Zacks
Consensus Estimate is $1,536 million.
Third-Quarter 2011, a Synopsis
McGraw-Hill posted soft third-quarter 2011 results. The
quarterly earnings of $1.21 a share missed the Zacks Consensus
Estimate by a couple of cents, and remained flat from the
prior-year quarter's earnings.
McGraw-Hill's total revenue of $1,908 million also fell short of
the Zacks Consensus Estimate of $2,041 million, and shrinked 2.5%
from the prior-year quarter.
McGraw-Hill expects to achieve earnings in the range of $2.81 to
$2.86 in fiscal 2011.
Fourth-Quarter 2011 Zacks Consensus
The analysts considered by Zacks expect McGraw-Hill to post
fourth-quarter 2011 earnings of 57 cents per share. The current
Zacks Consensus Estimate reflects a growth of 3.6% from the
prior-year quarter's earnings. The current Zacks Consensus Estimate
for the quarter ranges between 54 cents and 59 cents.
Zacks Agreement & Magnitude
Of the 8 analysts covering the stock, 1 analyst revised its
estimate downwards in the last 30 days leaving the Zacks Consensus
Estimate stable, while none of the analysts revised their estimates
in the upward direction.
Mixed Earnings Surprise History
With respect to earnings surprises, McGraw-Hill has topped as
well as missed the Zacks Consensus Estimate over the last four
quarters in the range of negative 1.6% to positive 5.8%. The
average remained at positive 2.8%, indicating that the company has
outperformed the Zacks Consensus Estimate by an average of 2.8% in
the trailing four quarters.
Earlier this month, the company announced an increase in
dividend, reflecting its plan of utilizing the free cash to enhance
shareholders' return, thereby boosting investors' confidence in the
McGraw-Hill hiked its quarterly dividend by 2% to 25.5 cents
from 25 cents a share. The increased dividend will be paid on March
12, 2012, to stockholders of record as of February 27, 2012.
McGraw-Hill started distributing dividends way back in 1937.
Since 1974, the company has boosted its dividend at a compound
annual dividend growth rate of around 9.6% and is now among those
S&P 500 companies (less than 25), which have raised dividend
annually for the 39th straight year.
A dividend hike primarily reflects the company's sound financial
position and defined future prospects. This is quite evident from
McGraw-Hill's balance sheet and cash flow positions. The company
ended the third quarter of 2011 with cash and cash equivalents of
$1,437.6 million, and generated free cash flow of $627.3 million
during the nine-month period.
Currently, we have a 'Neutral' recommendation on the stock.
However, McGraw-Hill, which competes with
), holds a Zacks #2 Rank, which translates into a short-term 'Buy'
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