McGraw-Hill Companies (MHP)
McGraw-Hill Companies (MHP)Presented byMatthew Y. ChengMark T. BrandenMcGraw-Hill CompaniesAGENDACompany OverviewSegmentsCompany AnalysisValuation1
McGraw-Hill CompaniesCompany Overview: MissionMcGraw-Hill CompaniesCompany Overview: MHPMcGraw-Hill Companies Æ Three DivisionsMc-Graw-Hill CompaniesEducationFinancialsMedia2
McGraw-Hill CompaniesCompany Overview: FinancialsMcGraw-Hill Financial Services Æ Standard and Poor’sStAndardCredit Market Services Æ Provides Credit RatingsInvestment Services Æ Investment Information and Market Data&Poor’sCorporate Value Consulting Æ Valuation and Value AnalysisMcGraw-Hill CompaniesStandard and Poor’s Revenue and Operating Growth Acquired PWC Corporate Valueand Consulting (2001)Acquired EA-Ratings (IndependentRussian Credit Rating Agency in2001)Largest profit margins of the threebusiness linesRepresents 30% of RevenueRepresents 57% of Profit3
McGraw-Hill CompaniesCompany Overview: EducationMcGraw-Hill Education Æ McGraw-Hill EducationEducatlionSchool Education Group Æ Primary and SecondaryEducational MaterialsHigher Education, Professional, and International Group ÆOffers e-books, online tutoring, andtraditional materialsMcGraw-Hill CompaniesMcGraw-Hill Education Revenue and Operating Growth Leading U.S. testing andsupplementary materials providerHigher Education segmentgenerating double-digit growthRepresents 50% of RevenueRepresents 35% of Profit4
McGraw-Hill CompaniesCompany Overview: MediaMcGraw-Hill Media Æ McGraw-Hill Information and Media ServicesMediaServicesAviation Week Æ Information for aviation and aerospaceBroadcast Æ Television (CA, CO, IN)Business Week Æ Global Business MagazineHealthcare Information Æ Marketing services and IntelligenceM-H Construction Æ Industry’s leading brandsPlatts Æ Energy Information and Marketing ServicesMcGraw-Hill CompaniesMcGraw-Hill Information and Media Services Revenue and Operating Growth Hit by slowdown in ad spendingExpanding online services andimplementing new cost control measuresRepresents 18% of RevenueRepresents 8.5% of Profit5
Financial SummaryStrategy Framework Growth Product Life Cycle Differentiation Brand differentiation and vertical services provide non-price advantagesCore Competency Emphasis on marketing, growth management, and product quality.Well defined, but will be tested by media group restructuringPricing Analysis: Few economies of scale between Publishing and Financial servicesScalable pricing model contribute to Publishing and CMS marginsEstablished Standard & Poor’s and McGraw-Hill brands convey premiums6
The Five C’s Character Capacity Financial health will allow MHP to safely increase its leverage in the futureConditions Robust distribution networkCapitalized pre-publication costsCapital Long- established and trusted voice in education and financial ratingsTransparency and dividend policy keeps stock price at stable levelsSurge in demand for MHP products will last only as long as financial market andglobal education conditions persistCompetitive Advantage Unique brand and opportunity to capture market share in a growing marketValue Analysis Financial and Product flexibility (CVC, K-12 products) Acquisitions key to capturing market share in growing industry(s) Distribution network may turn into a liability First Mover/Brand advantages may not be sustainableBCG Matrix:HighStarQuestion Mark ?LowCash CowDogHighLowGrowthRelative Market Share7
Valuation Assumptions Acquisitions included in ReinvestmentBeta not levered for international risk, for simplicityFCFF assumes refinancing of debt at constant debt/equity ratioEquity Value CalculationPV of High Growth Phase and Transition Phase4004092Terminal Value of Stable Growth Phase20861576PV of Terminal Value10735704Intrinsic Value of FCFF14,739,797Cash53535Debt1,056,524Value of Equity13,736,808Shares OutstandingValue per Share193,218 71.095Q&A8
5 McGraw-Hill Companies Company Overview: Media McGraw-Hill Media ÆMcGraw-Hill Information and Media Services M e d i a S e r v i c e s Aviation Week ÆInformation for aviation and aerospace Broadcast ÆTelevision (CA, CO, IN) Healthcare Information ÆMarketing services and Intelligence Platts ÆEnergy Information and Marketing Services Business Week ÆGlobal Business Magazine
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Copyright Glencoe/McGraw-Hill, a division of The McGraw-Hill Companies, Inc. Teacher Guide Natural Resources Lesson 1 Bellringer Creatas/PunchStock
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McGraw-Hill Education is a leading global educational publisher which contributes 50% of the company’s revenue (Exhibit 3). Higher education is the largest business unit within McGraw-Hill Education. Figure 1 below shows the company’s organization, and a break down of McGraw-Hill
McGraw-Hill's 500 SAT Math Questions to Know by Test Day McGraw-Hill's 500 Spanish Questions: Ace Your College Exams McGraw-Hill's 500 Statistics Questions: Ace Your College Exams . The majority of critical reading questions on the SAT follow either a single reading passage or a pair of passages that are connected in some way. These ques-
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