McGraw Hill Financial, Inc. (MHFI), provider of financial information and owner of one of the top credit rating agencies (Standard & Poor’s), is slated to report its third-quarter 2014 earnings on Oct 29. Last quarter, the company recorded a positive earnings surprise of 8.2%. Let’s see how things are shaping up for this announcement.
Factors Affecting This Quarter
Issuance volumes of bank loans, corporate bonds, global asset-backed security (ABS) and global CDO’s saw a marked decline in the third quarter. This is likely to negatively impact McGraw Hill Financial’s revenues, prompting us to be on the sidelines.
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 #1, 2 or 3 for this to happen. This is not the case here as you will see below:
Zacks ESP: ESP for McGraw Hill Financial is -1.05%. This is because the Most Accurate estimate stands at 94 cents and the Zacks Consensus Estimate stand at 95 cents.
Zacks Rank: McGraw Hill carries a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
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:
The Walt Disney Company (DIS) has an Earnings ESP of +3.41% and a Zacks Rank #2 (Buy).
The New York Times Company (NYT) has an Earnings ESP of +100.00% and a Zacks Rank #2.
Dean Foods Company (DF) has an Earnings ESP of +15.39% and a Zacks Rank #3.
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