The McGraw-Hill Companies Inc. (MHP) in its attempt to optimize its shareholders’ return, announced a new share repurchase program, following the previous $45 million program that commenced in January 2007.
The newly announced program authorizes the company to buy back up to $50.0 million or 17% of its common stock through open market or private transactions. In the current fiscal, McGraw-Hill has repurchased 7.7 million shares and had approximately 700,000 shares left at its disposal under its old repurchase program.
Share repurchase reflects the company’s sound financial position and well-defined future prospects. It enhances the shareholders’ return and boosts the market value of the stock.
Earlier this month, McGraw-Hill announced that it has decided to divest its Broadcasting Group to re-evaluate its portfolio of businesses and enhance its concentration on global brands, thereby boosting shareholders value through proper capital allocation.
However, McGraw-Hill, which owns one of the top credit rating agencies (Standard & Poor’s), did not highlight the time limit for the sale of the division.
During fiscal 2010, the Broadcasting Group generated revenue of approximately $100 million, up 18% from the prior year. It operates nine television stations (four ABC affiliates and five Azteca Americaaffiliated stations). The company is confident that the strategic locations of these television stations will entice buyers.
McGraw-Hill has ABC affiliates in Denver, Colorado (KMGH-TV), San Diego, California (KGTV), Bakersfield, California (KERO-TV), Indianapolis, Indiana (WRTV) and Azteca America affiliates in Denver, Fort Collins, Colorado Springs, San Diego and Bakersfield.
McGraw-Hill also notified that it is focusing on the assessment of the general and administrative expenses to run its divisions smoothly.
Currently, we have a long-term 'Neutral' rating on McGraw-Hill, which competes with Pearson plc (PSO). However, the company holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ recommendation.
MCGRAW-HILL COS (MHP): Free Stock Analysis Report
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