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

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

Summary:
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.

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 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.

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 financial decisions.

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 Platts.


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