Posted by: sanjayshetty | September 19, 2007


I did an analysis of MHP based on Joe Ponzio’s Discounted Cashflow methodology

I like this company for a couple of reasons, it has Standard & Poor’s, as a division besides that its operations consist of three business segments: McGraw-Hill Education, Financial Services and Information & Media, all of which are needed in the new connected world irrespective of downturns in one market or the other. The company has a decent MOAT however reecently the stock was beaten down by Mr. Market, it looked like an interesting time to explore it.

Company Valuation:(All figures are in $Mil except per share values)
Total Value $25,526
Per Share Value $69.58
Desired Discount 25%
Purchase Price $52.18
Current Price $47.85 (price purchased at on Tuesday 18th Sept 2007).
Actual Discount 31%

For the first 10 yrs I’ve grown the FCF at 15.2% followed by 5% for the next 10 years.
Median values for:
Shareholder Equity 10.8%
Free Cash Flow 15.2%
CROIC 29.0%

The numbers seem quite nice 🙂 

I then checked for insider activity hmm nothing suspicious here, nobody in the company seems to be selling and running away. That’s a relief!

I then bought it using the simulator at Investopedia I’m going to track how this does.


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