Saturday, March 10, 2012

McGraw Hill (MHP) 2012 Reveiw

McGraw Hill Co. (MHP) is a global information provider serving the financial, education and business markets via Standard & Poor’s, McGraw Hill Education, Business Week, Aviation Week and Platts.

MHP earns an amazing 35%+ return on equity and has grown profits and dividends 8-12% annually over the last 10 years. While the company experienced profit difficulties in 2009, it recovered in 2010 and continues to grow as a result of:

(1) rapid growth in digital sales,

(2) improvement in the domestic corporate new issue market as well as the credit market services division,

(3) management’s significant efforts to streamline operations and lower costs,

(4) an expanded stock buyback program.


(1) lower funding levels in the primary education sector,

(2) the residual impact from the recent credit crisis.

McGraw Hill is rated A by Value Line, has a 34% debt to equity ratio and its stock yields approximately 2.2%.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2002
MHP 2.2% 6% 30% 10
IND 3.1 5 22

Debt/Equity ROE EPS Down Since 2002 Net Margin Value Line Rating
MHP 34% 48% 3 14% A
IND 28 22 NA 7 NA


Note: MHP stock made steady progress off its March 2009 low, surpassing the down trend off its June 2007 high (red line) and the November 2008 trading high (green line). The stock is in a long term trading range (straight blue lines) and is in an intermediate term up trend (purple lines). The wiggly blue line is on balance volume. The Dividend Growth Portfolio owns no shares of MHP. The upper boundary of its Buy Value Range is $17; the lower boundary of its Sell Half Range is $61.

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.