McGraw-Hill Companies (NYSE:MHP) announced its results for the third quarter on November 2, 2012. McGraw-Hill produces a range of information products and services for the education, financial services, and business information markets.
A business' earnings are the main determinant of its share price because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run. SEE: 5 Tricks Companies Use During Earnings Season
The Numbers: McGraw-Hill Companies beat expectations with its latest EPS and revenue figures. The company reported adjusted net income of $1.33 per share versus the $1.30 per share estimate and revenues of $1.95 billion versus the $1.59 billion estimate. Revenue climbed 2.4% from the same period last year. McGraw-Hill Companies' revenue rose last quarter after falling 2.1% to $1.55 billion in the second quarter. McGraw-Hill Companies reported net income of $314 million during the third quarter. This is a 14.1% decline from last year. Last quarter's falling profit ends a streak of three consecutive quarters of year-over-year profit increases.
Management Quote: "We are pleased by the success of our Growth and Value Plan and the strong results of the McGraw-Hill Financial businesses. McGraw-Hill Financial, which now includes the newly formed S&P Dow Jones Indices joint venture, achieved double-digit growth in revenue and adjusted operating profit in the quarter. McGraw-Hill Education, under the new leadership of Buzz Waterhouse, managed through the weakest K-12 market in a decade while accelerating digital products and services and building world-class capabilities to drive global growth," said Harold McGraw III, chairman, president, and chief executive officer of The McGraw-Hill Companies.
A Look Back: Net income has increased 5.3% year-over-year on average across the last five quarters. The biggest gain came in the fourth quarter of the last fiscal year, when income climbed 39.4% from the year-earlier quarter.
Looking Ahead: Analysts have a more positive outlook for the company's next-quarter performance. Over the past month, the average estimate for the fourth quarter has gone up from 70 cents per share to 71 cents. Increasing earnings estimate is a positive sign about the company and it typically leads a increase in the stock price. The average estimate for the fiscal year is $3.40 per share, a rise from $3.35 90 days ago.