Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- McGraw-Hill Companies (NYSE: MHP) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- MCGRAW-HILL COMPANIES has improved earnings per share by 42.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MCGRAW-HILL COMPANIES increased its bottom line by earning $2.96 versus $2.75 in the prior year. This year, the market expects an improvement in earnings ($3.21 versus $2.96).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Financial Services industry and the overall market, MCGRAW-HILL COMPANIES's return on equity significantly exceeds that of both the industry average and the S&P 500.
- MHP, with its decline in revenue, underperformed when compared the industry average of 7.9%. Since the same quarter one year prior, revenues fell by 19.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Even though the current debt-to-equity ratio is 1.50, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Financial Services industry.
- Net operating cash flow has decreased to $225.00 million or 26.56% when compared to the same quarter last year. Despite a decrease in cash flow of 26.56%, MCGRAW-HILL COMPANIES is still significantly exceeding the industry average of -99.74%.
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