The 10-second takeaway
For the quarter ended June 30 (Q2), McGraw-Hill missed estimates on revenue and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue contracted slightly and GAAP earnings per share improved.
Margins improved across the board.
McGraw-Hill logged revenue of $1.55 billion. The five analysts polled by S&P Capital IQ foresaw a top line of $1.59 billion on the same basis. 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 came in at $0.85. The five earnings estimates compiled by S&P Capital IQ forecast $0.76 per share. 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.
For the 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.
Next quarter's average estimate for revenue is $1.98 billion. On the bottom line, the average EPS estimate is $1.30.
Next year's average estimate for revenue is $6.47 billion. The average EPS estimate is $3.34.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 476 members out of 520 rating the stock outperform, and 44 members rating it underperform. Among 194 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 173 give McGraw-Hill a green thumbs-up, and 21 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on McGraw-Hill is outperform, with an average price target of $52.17.
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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 McGraw-Hill. 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.