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Can McGraw-Hill Companies Meet These Numbers?

McGraw-Hill Companies (NYSE: MHP  ) is expected to report Q3 earnings around Oct. 10. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict McGraw-Hill Companies's revenues will expand 2.8% and EPS will expand 6.6%.

The average estimate for revenue is $1.96 billion. On the bottom line, the average EPS estimate is $1.29.

Revenue details
Last quarter, McGraw-Hill Companies recorded revenue of $1.55 billion. GAAP reported sales were 0.6% lower than the prior-year quarter's $1.56 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at $0.85. GAAP EPS of $0.76 for Q2 were 12% higher than the prior-year quarter's $0.68 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 62.9%, 100 basis points better than the prior-year quarter. Operating margin was 26.3%, 410 basis points better than the prior-year quarter. Net margin was 14.0%, 40 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $6.46 billion. The average EPS estimate is $3.37.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 472 members out of 515 rating the stock outperform, and 43 members rating it underperform. Among 204 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 187 give McGraw-Hill Companies a green thumbs-up, and 17 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on McGraw-Hill Companies is outperform, with an average price target of $52.17.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of The McGraw-Hill Companies. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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