McGraw-Hill Financial posted second-quarter 2014 earnings of $1.06
per share, which topped the Zacks Consensus Estimate while rising
15% year over year. The robust quarterly performance was driven by
growth across all business segments especially S&P Ratings
Services. Going ahead, McGraw-Hill is likely to benefit from its
strategic investments, which include formation of S&P Dow Jones
Indices and several acquisitions, over the long-term. The company's
focus on high margin business through proper capital allocation is
paying off. After the impressive results, management upgraded the
full-year 2014 earnings guidance. However, anticipated weakness in
structured finance and difficult debt issuance environment along
with the pending verdict on the DOJ's civil lawsuit filed against
the company remain concerns. All these factors compel us to be on
the sidelines. Consequently, we reiterate our Neutral
recommendation on the stock.
McGraw-Hill Financial, Inc. (MHFI) is the provider of financial
information, and owns one of the top credit rating agencies
(Standard & Poor's). The McGraw-Hill Companies Inc.
rechristened as McGraw Hill Financial and commenced trading under a
new symbol "MHFI" on May 14, 2013.
The company now primarily focuses on capital and commodities
markets and includes iconic brands like S&P Ratings, S&P
Capital IQ, S&P Indices and Platts. The company currently
S&P Capital IQ: The segment provides risk evaluation,
investment research and data to potential investors, corporations,
governments, financial institutions, investment managers and
financial advisors globally.
S&P Dow Jones Indices: The company along with the CME Group,
announced the commencement of its index business with the launch of
S&P-Dow Jones Indices. It keeps track of different valuation
and index benchmarks for investment advisors, wealth managers, and
Standard & Poor's Ratings Services: Standard & Poor's is
the world's foremost provider of credit ratings offering investors
information and independent benchmarks for their investment and
Commodities & Commercial Markets: The Segment consists of
business-to-business companies specializing in commercial and
commodities markets, and comprises brands such as, J.D. Power and
Associates (acquired in 2005), McGraw-Hill Construction and
McGraw Hill Financial, Inc. (MHFI): Read the Full
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