The McGraw-Hill Companies Inc.
) - a publisher and a provider of financial information and media
services - is slated to release its financial results for the
third quarter of fiscal 2012 on Friday, November 2, 2012.
Earlier, the results were scheduled to release on October 31,
2012; however, it has been postponed to Friday, November 2, 2012,
owing to bad weather conditions arising from Hurricane Sandy.
The current Zacks Consensus Estimate for earnings is $1.30 per
share, ranging between a low of $1.28 and a high of $1.35 per
share. The current estimate reflects a 7.4% increase from $1.21
per share reported in the prior-year period. Revenue, as per
Zacks Consensus Estimate for the quarter, is valued at $1,989
We believe the company's focus on growth and value plan along
with the acquisition made by the company recently have aided the
earnings estimate to move up, which is expected to continue in
the upcoming quarters.
Synopsis of the Last Quarter
In the last reported quarter, McGraw-Hill acquired Credit Market
Analysis Limited (CMA) from
CME Group Inc.
), which is an independent data provider in the over-the-counter
markets. The acquisition strengthens S&P Capital IQ's
position in the market compared to its peers.
McGraw-Hill's second-quarter 2012 adjusted earnings increased 25%
to 85 cents a share and also surpassed the Zacks Consensus
Estimate of 76 cents. However, including one-time items, earnings
increased 11% year over year.
The company stated that the strong performance of S&P
Indices/ S&P Capital IQ and Commodities & Commercial
boosted the quarterly profits.
McGraw-Hill's total revenue inched down 1% year over year to
$1,547 million and came below the Zacks Consensus Estimate of
CME GROUP INC (CME): Free Stock Analysis
MCGRAW-HILL COS (MHP): Free Stock Analysis
PEARSON PLC-ADR (PSO): Free Stock Analysis
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(For full report on earnings study:
McGraw-Hill Beats on Bottom Line
Agreement of Estimate Revisions
For the to-be-reported quarter, 2 out of 6 analysts raised their
earnings estimates while none lowered the same over the past 30
days. During the last 7 days none of the analysts changed their
Moreover, for fiscal 2012, a similar trend was noticed over the
last 7 as well as 30 days, with 2 out of 8 analysts revising
their estimates up and none lowering the same over the same time
Magnitude of estimate Revisions
For the upcoming quarter, the Zacks Consensus Estimate moved up
by a penny to $1.30 per share over the last 30 days, whereas in
the past 7 days it remained unchanged.
For fiscal 2012, the Zacks Consensus Estimate increased by 5
cents to $3.40 per share in the last 30 days, whereas no changes
were seen over the last 7 days.
Mixed Earnings Surprise History
With respect to earnings surprise, McGraw-Hill has beaten the
Zacks Consensus Estimate in three out of the last four quarters,
whereas it missed the estimate in one quarter. The company has
topped the Zacks Consensus Estimate by an average of 6.2% in the
trailing four quarters.
Neutral on McGraw-Hill
With an aim to boost the shareholders' value, McGraw-Hill
announced extensive growth and value measures, including the
separation of the company into two independent companies,
McGraw-Hill Financial and McGraw-Hill Education. McGraw-Hill
expects to complete the split-up by the end of fiscal 2012.
Further, the company added that it will focus on abridging costs
by $100 million to ensure that higher costs would not be an
impediment in margin expansion at both Financial and Education.
However, the company's results could be negatively impacted by
lower volume of debt securities issued in the capital markets.
Financial distress of the recent kind could either dent
investor's demand for debt securities or make issuers reluctant
to issue such securities. In addition, increase in interest rates
or credit spreads, may adversely affect the general level of debt
Due to the factors mentioned above, we currently maintain our
long term 'Neutral' recommendation on the stock. McGraw-Hill,
which competes with
), holds a Zacks #2 Rank, translating it into short-term Buy
rating on the stock based on positive earnings surprise in the
last three successive quarters.