Updated Research Report on McGraw Hill - Analyst Blog
February 21 2014 - 2:50PM
Zacks
On Feb 19, 2014 we issued an updated research report on
McGraw Hill Financial, Inc. (MHFI). Ever since
McGraw Hill posted better-than-expected fourth-quarter 2013 results
and provided an upbeat guidance for 2014 (on Feb 4), the Zacks
Consensus Estimate has been trending upwards. Stellar performance
across all segments except the Standard & Poor’s Ratings
Services was the driving factor. Further, since the earnings
release, the stock has garnered a return of nearly 4.7%.
The company’s top and bottom lines of $1,250 million and 81 cents
easily surpassed the Zacks Consensus Estimate while rising 2% and
12% respectively, year over year. Following the strong performance,
McGraw Hill now projects adjusted earnings in the range of
$3.75–$3.85 per share. Further, the company anticipates revenue
growth in mid single digits in 2014, and is likely to generate free
cash flow worth $1 billion.
Consequently, for 2014, the Zacks Consensus Estimate has moved to
$3.80 from $3.76 and for 2015, it has risen to $4.30 from $4.27,
over the last 30 days.
Further, McGraw Hill is an attractive pick for investors seeking
both growth and income, as the company announced a dividend hike on
Jan 29, 2014. Moreover, it raised its quarterly dividend by 7.1% to
30 cents per share (or $1.20 annually) from 28 cents (or $1.12
annually). The new payout will be given on Mar 12, 2014 to
stockholders of record on Feb 26.
Also, McGraw-Hill, which competes with Dun & Bradstreet
Corp. (DNB), now seems to be well positioned to focus on
high margin business after it offloaded the Education segment and
Aviation week. The company is now concentrating on more on core
financial areas that would help it emerge as a leader in rating
provider, benchmark provider, and analytics in the global capital
and commodity markets.
Further, McGraw-Hill is likely to benefit from its strategic
investments such as formation of S&P Dow Jones Indices coupled
with the S&P Capital IQ’s acquisitions of Credit Market
Analysis, QuantHouse, R2 Financial Technologies and TheMarkets.com
along with a significant stake (68%) in India’s leading rating
agency CRISIL as it positions to grab a wider market share.
Mc Graw Hill currently has a Zacks Rank #2 (Buy).
Key Picks from the Sector
Other stocks worth considering in the financial services sector
include FactSet Research Systems Inc. (FDS) and
Verisk Analytics, Inc. (VRSK). Both carry a Zacks
Rank #2.
DUN &BRADST-NEW (DNB): Free Stock Analysis Report
FACTSET RESH (FDS): Free Stock Analysis Report
MCGRAW HILL FIN (MHFI): Free Stock Analysis Report
VERISK ANALYTIC (VRSK): Free Stock Analysis Report
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