The 10-second takeaway
For the quarter ended Sep. 30 (Q3), McGraw-Hill Companies met expectations on revenues and beat slightly on earnings per share.
Compared to the prior-year quarter, revenue grew slightly and GAAP earnings per share dropped.
Gross margins grew, operating margins increased, net margins dropped.
McGraw-Hill Companies booked revenue of $1.95 billion. The eight analysts polled by S&P Capital IQ looked for a top line of $1.98 billion on the same basis. GAAP reported sales were 2.4% higher than the prior-year quarter's $1.91 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 $1.33. The eight earnings estimates compiled by S&P Capital IQ predicted $1.30 per share. GAAP EPS of $1.10 for Q3 were 9.1% lower than the prior-year quarter's $1.21 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 65.2%, 250 basis points better than the prior-year quarter. Operating margin was 32.1%, 30 basis points better than the prior-year quarter. Net margin was 16.1%, 310 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $1.59 billion. On the bottom line, the average EPS estimate is $0.71.
Next year's average estimate for revenue is $6.44 billion. The average EPS estimate is $3.39.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 475 members out of 519 rating the stock outperform, and 44 members rating it underperform. Among 209 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 189 give McGraw-Hill Companies a green thumbs-up, and 20 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 $56.50.
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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 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.