Will McGraw Hill (MHFI) Disappoint This Earnings Season?


Financial intelligence providing company McGraw Hill Financial, Inc. (MHFI) is slated to post its first-quarter 2014 results on Apr 29, 2014. In the previous quarter, the company delivered a positive earnings surprise of 2.53%. Let’s see how things are shaping up for this announcement.

Factors This Past Quarter

In the previous quarter, McGraw Hill’s earnings surged 12% year over year. Alongside, reported revenues inched up 2% and exceeded the Zacks Consensus Estimate. The company’s solid revenues reflected strong performance across all business segments except Standard & Poor’s Ratings Services, which witnessed a 2% decline in revenues.

Earnings Whispers

Our proven model does not conclusively show that McGraw Hill is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, #2 or #3 for this to happen. This is not the case here as you will see below.

Zacks ESP: McGraw Hill currently has an Earnings ESP of -1.15%. This is because the Most Accurate estimate stands at 86 cents a share, while the Zacks Consensus Estimate is pegged at 87 cents.

Zacks Rank #3 (Hold): McGraw Hill’s Zacks Rank #3 (Hold) when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Rite Aid Corp. (RAD), Earnings ESP of +14.29% and a Zacks Rank #1 (Strong Buy).

The Walt Disney Co. (DIS), Earnings ESP of +2.08% and a Zacks Rank #2 (Buy).

Amazon.com Inc. (AMZN), Earnings ESP of +30.00% and a Zacks Rank #2 (Buy).

Read the Full Research Report on MHFI
Read the Full Research Report on RAD
Read the Full Research Report on AMZN
Read the Full Research Report on DIS

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