The 10-second takeaway
For the quarter ended March 31 (Q1), McGraw-Hill Companies met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped. Non-GAAP earnings per share grew significantly. GAAP earnings per share expanded significantly.
Gross margins dropped, operating margins expanded, net margins grew.
McGraw-Hill Companies reported revenue of $1.18 billion. The five analysts polled by S&P Capital IQ hoped for a top line of $1.17 billion on the same basis. GAAP reported sales were 11% lower than the prior-year quarter's $1.33 billion.
EPS came in at $0.80. The six earnings estimates compiled by S&P Capital IQ predicted $0.73 per share. Non-GAAP EPS of $0.80 for Q1 were 57% higher than the prior-year quarter's $0.51 per share. GAAP EPS of $2.58 for Q1 were 500% higher than the prior-year quarter's $0.43 per share.
For the quarter, gross margin was 23.5%, much worse than the prior-year quarter. Operating margin was 23.5%, 440 basis points better than the prior-year quarter. Net margin was 62.2%, much better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $1.20 billion. On the bottom line, the average EPS estimate is $0.81.
Next year's average estimate for revenue is $4.85 billion. The average EPS estimate is $3.20.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 475 members out of 522 rating the stock outperform, and 47 members rating it underperform. Among 214 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 196 give McGraw-Hill Companies a green thumbs-up, and 18 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 $58.00.
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