McGraw-Hill Companies Inc. Earnings Cheat Sheet: Revenue Slips After Increasing Four Quarters in a Row, Net Income Declines

S&P 500 (NYSE:SPY) component McGraw-Hill Companies Inc. (NYSE:MHP) reported its results for the third quarter. McGraw-Hill produces a range of information products and services for the education, financial services, and business information markets.

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McGraw-Hill Companies Earnings Cheat Sheet for the Third Quarter

Results: Net income for the book publisher fell to $365.6 million ($1.21 per share) vs. $379.9 million ($1.23 per share) a year earlier. This is a decline of 3.8% from the year earlier quarter.

Revenue: Fell 2.5% to $1.91 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: MHP fell short of the mean analyst estimate of $1.23 per share. It fell short of the average revenue estimate of $2.04 billion.

Quoting Management: “Overall, the business performed well despite challenging market conditions in global credit markets and historically low funding levels in the U.S. elementary-high school market. We are still on track for another year of growth in 2011, but we remain cautious over the balance of the year,” said Harold McGraw III, chairman, president, and chief executive officer of The McGraw-Hill Companies. “We now expect to achieve diluted earnings per share from continuing operations of $2.81 to $2.86 compared to adjusted earnings per share of $2.68 in 2010.”

Key Stats:

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the first quarter, which saw revenue rise 7.7%.

The company fell short of forecasts after beating estimates in the previous two quarters. In the second quarter, it topped the mark by one cent, and in the first quarter, it was ahead by 2 cents.

Last quarter’s profit decrease breaks a streak of two consecutive quarters of year-over-year profit increases. Net income rose 10.5% in the second quarter and 16.2% in the first quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 57 cents a share to 59 cents over the last ninety days. The average estimate for the fiscal year is $2.89 per share, a rise from $2.88 ninety days ago.

Competitors to Watch: Moody’s (NYSE:MCO), Reed Elsevier plc (NYSE:RUK), Reed Elsevier NV (NYSE:ENL), Thomson Reuters Corp. (NYSE:USA) (NYSE:TRI), Gannett Co., Inc. (NYSE:GCI), Meredith Corporation (NYSE:MDP), Scholastic Corporation (NASDAQ:SCHL), Pearson PLC (NYSE:PSO), News Corporation (NASDAQ:NWSA), and The New York Times Company (NYSE:NYT).

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(Source: Xignite Financials)