McGraw-Hill's Share Buyback Program - Analyst Blog
30 Juni 2011 - 11:45AM
Zacks
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.
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