The McGraw-Hill Companies Earnings: Here’s Why Shares are Down Now

The McGraw-Hill Companies, Inc. (NYSE:MHP) delivered a profit and met Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 1%.

The McGraw-Hill Companies, Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 45.86% to $0.72 in the quarter versus EPS of $0.63 in the year-earlier quarter.

Revenue: Decreased 19.32% to $1.23 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: The McGraw-Hill Companies, Inc. reported adjusted EPS income of $0.72 per share. By that measure, the company met the mean analyst estimate of $0.72. It missed the average revenue estimate of $1.61 billion.

Quoting Management: “As we approach the successful completion of the Growth and Value Plan, I could not be more pleased with the execution of the Plan and the value it has unlocked for shareholders,” said Harold McGraw III, chairman, president, and chief executive officer of The McGraw-Hill Companies. He continued, “The sale of McGraw-Hill Education is anticipated in the first quarter. Now we reflect on the tremendous opportunity both McGraw Hill Financial and McGraw-Hill Education have before them. In 2012, McGraw Hill Financial delivered 13% revenue growth and 32% diluted adjusted EPS from continuing operations growth. This performance demonstrates the growth potential of McGraw Hill Financial, with its market-leading positions providing essential intelligence to its customers.”

Key Stats (on next page)…

Revenue decreased 37.22% from $1.95 billion in the previous quarter. EPS decreased 45.86% from $1.33 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.6 to a profit $0.59. For the current year, the average estimate has moved up from a profit of $3.4 to a profit of $3.45 over the last ninety days.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute – click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)