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The Zacks Analyst Blog Highlights: The McGraw-Hill Companies, Apollo Global Management, Thomson Reuters, FactSet Research Systems and International Paper

Zacks Equity Research


For Immediate Release

Chicago, IL – March 28, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include The McGraw-Hill Companies Inc. (MHP), Apollo Global Management, LLC (APO), Thomson Reuters Corporation (TRI), FactSet Research Systems Inc. (FDS) and International Paper Company (IP).

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Here are highlights from Wednesday’s Analyst Blog:

McGraw-Hill Resumes Share Buyback

Concurrent to the sale of its education division, The McGraw-Hill Companies Inc. (MHP) resumed its accelerated share repurchase program with $500 million.

McGraw-Hill will be buying back shares using a portion of the proceeds it received from the divestiture of its education segment. The company had earlier stated that it expects to utilize the proceeds from sales (approximately $1.9 billion net of tax) to buy back shares, reduce short-term debt obligations and for strategic acquisitions.

McGraw-Hill recently completed the divestiture of its education division to the Apollo Global Management, LLC (APO) for $2.4 billion cash.

As part of its “Growth and Value Plan”, McGraw-Hill returned significant capital to the investors in the recent past. The company repurchased $1.5 billion worth of shares in 2011, while it bought back $300 million worth of shares in 2012. Moreover, it distributed $300 million in dividends in 2012 and paid a special dividend of $700 million in Dec 2012. 

At the end of the fourth quarter of 2012, McGraw-Hill had approximately 16.9 million shares remaining under its existing share repurchase program. Taking into account the impact of this new accelerated share repurchase program, the company will have roughly 8 million shares remaining under its current buyback authorization.

McGraw-Hill has a healthy capital and cash position, which facilitates it to maintain an efficient capital deployment strategy. Apart from share buybacks and dividend payments, the company channels its excess capital toward accretive acquisitions. 

McGraw-Hill has made several strategic investments in its core businesses to drive long-term profitability. The formation of S&P Dow Jones Indices coupled with S&P Capital IQ’s acquisitions of Credit Market Analysis Limited, QuantHouse, R2 Financial Technologies and TheMarkets.com position it well against its competitors, Thomson Reuters Corporation (TRI), FactSet Research Systems Inc. (FDS) and Bloomberg to grab a wider market through superior functionality and investor oriented services and in turn help boost the top- and bottom-line results of the company.

Going forward, McGraw-Hill expects revenues to increase in the high single-digit, while adjusted earnings are forecasted to be in the range of $3.10 – $3.20 per share for 2013, up 15% year over year. 

Despite these positives, shares of McGraw-Hill hold a Zacks Rank #4 (Sell) as the $5 billion civil fraud case against S&P ratings by the U.S. Department of Justice remains a drag on the stock.


IP Commits to Sustainably Forest Management

International Paper Company (IP), a global paper and packaging firm, has recently pledged its commitment to sustainable forest management by joining the Global Forest & Trade Network in North America (:GFTN) that focuses on eliminating illegal logging and promoting eco-friendly and socially secured forest management practices. With this initiative, International Paper has joined the WWF (World Wildlife Fund) led campaign to support and facilitate greater coordination of national and regional efforts for a responsible and credible forest management program.

Initially, International Paper’s participation will be limited to the fiber sourced from its North American and Brazilian mills, representing over two-thirds of its global fiber volume. The company expects its involvement and purchasing power to eventually force the suppliers for responsible forestry around the globe. In concurrence with this commitment, International Paper will issue an updated global fiber sourcing policy at its corporate website.

Earlier, in 2012, International Paper had announced a voluntary initiative to increase the third-party certified wood fiber by 15% by 2020. Joining GFTN partly fulfills this goal of the company and further supports to preserve the biodiversity and ecological balance. The company has already increased its sourcing of wood fiber from Forest Stewardship Council in the U.S. by over 1.2 million tons in the past five-year period, and expects a three-fold increase by 2014.

International Paper has historically followed an inorganic growth strategy to extend its operations.


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