MCGRAW-HILL COMPANIES INC. $49 (New York symbol MHP; Conservative Growth Portfolio, Consumer sector; WSSF Rating: Average) is a leading publisher of school textbooks. It also publishes BusinessWeek magazine and several trade journals, and owns four TV stations.
However, it gets roughly two-thirds of its profits from its Standard & Poor’s subsidiary, which provides credit ratings and opinions on a variety of investments. Institutional investors rely on these ratings to select investments.
The stock rose from $44 in July 2005 to $60 in March 2006, but has moved down recently on fears that weakness in global stock markets will hurt Standard & Poor’s revenue growth. Fears of lower advertising revenue at its magazine and TV business have also weighed on the stock.
McGraw-Hill should earn $2.33 a share this year, and the stock trades at 21.0 times that estimate. This figure includes $0.13 a share in expenses related to stock options issued to employees.
The company recently changed the way it grants stock options, which should minimize their impact on its future earnings.
This move cut McGraw-Hill’s earnings in the first quarter of 2006 by $0.04 a share. Excluding this charge, income rose 20%, to $0.24 a share from $0.20 a year earlier. Revenue rose 10.7%, to $1.14 billion from $1.03 billion. The $0.726 dividend yields 1.5%.
Standard & Poor’s is now expanding its financial services apart from ratings, such as security price quotes. It also earns fees for licensing its stock market indexes (such as the Standard & Poor’s 500) to mutual fund companies and institutions that sponsor exchange traded funds.
McGraw-Hill’s education business gained in the past few years from increased federal funding under the No Child Left Behind Act. But textbook sales in the next year or two could suffer until school boards need to replace their current inventories. More college students are also buying discounted textbooks from online sellers, which cuts into McGraw-Hill’s profit margins.
The stock may make little progress in the next few months. But McGraw-Hill could unlock some of its value by breaking itself up, or spinning off some of its operations as separate companies.
McGraw-Hill is a hold.
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What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
Information You Give Us: We receive and store any information you enter on our website or give us in any other way through sign-up forms or ordering forms for publications and services. You can choose not to provide certain information, but then you might not be able to take advantage of many of our services and features. We use the information that you provide for such purposes as responding to your requests, customizing your web browsing experience for you, improving our website, and communicating with you.
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Information from Other Sources: For reasons such as improving personalization of our service (for example, providing better product recommendations or special offers that we think will interest you), we might receive information about you from other sources and add it to our account information. We also sometimes receive updated delivery and address information from our shippers or other sources so that we can correct our records and deliver your next purchase or communication more easily.
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Although you may be able to access some of our websites without being required to register or provide personal information, certain websites and sections of our websites may require registration. In addition, if you choose to contact us to ask a question, we will collect your personal information so that we can respond to your question.
To make the visitor’s experience on our website easier, we may use per-session “cookies” (session identifiers) to track the state of the visitor session. This “cookie” is destroyed when your session with our website is over.
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Does TSI Network Use the Information It Receives?
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Except as provided herein, TSI Network will not sell or rent personal information about you to unaffiliated third parties.
We may disclose personal information you have provided through our websites, for the above purposes, to persons or companies that we retain to carry out and other activities for which you have registered or in which you have otherwise asked to participate. In particular, we may for these purposes transfer information to any country (including the USA and other countries which may not offer the same level of data protection as Canada). We also will disclose personal information if required by law, including compliance with warrants, subpoenas or other legal processes.
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Changes to this Policy
This Policy is the sole authorized statement of TSI Network's practices with respect to the collection of personal information through TSI Network's websites and the subsequent use and disclosure of such information. Any summaries of this Policy generated by third party software or otherwise (for example, in connection with the "Platform for Privacy Preferences" or "P3P") shall have no legal effect, are in no way binding upon TSI Network, shall not be relied upon in substitute for this Policy, and neither supersede nor modify this Policy.
TSI Network may revise this Policy from time to time.
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