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McGraw Hill Financial, Inc. (MHFI): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

By: Zacks.com
Posted: 2/19/2014 7:00:00 AM
Referenced Stocks: MHFI

Summary:
McGraw Hill Financial posted mixed third quarter results wherein adjusted earnings per share of $1.02 per share beat the Zacks Consensus Estimate while rising 32% year over year. However, revenues of $1,263 million failed to meet the Zacks Consensus despite a 10% rise. Also, the company recorded a $60 million legal charge pertaining to the DOJ's $5 billion civil lawsuit filed against S&P Rating's services. Management also stated that legal expenses are likely to shoot up in the following days as the verdict remains pending. Nevertheless the company maintains a positive attitude and has completed its portfolio restructuring with the sale of its construction data unit. McGraw Hill Financial has been shedding its non-core operations to focus on its benchmarks, data and analytics business. Moreover it has stated that it will pursue strategic acquisitions in the near future to aid its goal of emerging as a leader in the global analytics arena. Weighing the pros and cons, we reiterate our Neutral recommendation on the stock.

Overview:

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 operates through:

S&P Ratings Services: Standard & Poor's is one of the world's foremost provider of credit ratings offering investors information and independent benchmarks for their investment and financial decisions.

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 institutional investors.

Commodities & Commercial Markets: The segment consists of business-to-business companies focusing in commercial and commodities markets, and comprises brands such as, J.D. Power and Associates (acquired in 2005), and Platts.

On Nov 3, 2014, McGraw Hill Financial completed the divestiture of McGraw Hill Construction to Symphony Technology Group.


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