Episode Details

McGrawHill Q4 FY2026 earnings breakdown - conversational walkthrough with a price-aware verdict and Wall Street consensus comparison. THE CALL: HOLD (3/5 conviction, STRONG) - CURRENT @ $11.98 - HOLD - BUY below $10.18 with $8.39 stop - AVOID above $16.17 TRIGGER: Two consecutive quarters of Higher Education above plus 20 percent OR Q2 FY27 K-12 print confirming back-to-school adoption strength WINDOW: Through Q2 FY2027 earnings (November 2026) TRACKER: chargedalpha.com WALL STREET CONSENSUS - Ratings: 1 Strong Buy / 5 Buy / 7 Hold / 1 Sell / 0 Strong Sell - HOLD - Median 12-month price target: $15.00 (range $11 - $19) - Charged Alpha vs consensus: IN LINE THESIS McGraw Hill is a 138-year-old educational publisher executing a credible digital pivot in its first full year as a public company. Higher Education segment up 24 percent is the inflection — the question is whether the trajectory survives FY27 against an AI disruption backdrop. Bull lever: Higher Ed plus 24 percent YoY for two straight quarters; re-occurring revenue plus 14.8 percent at $358M; FY27 guide above street at $2.20-$2.25B; 17 percent FCF yield at current $11.98; stock 30 percent below $17 IPO price. Key risk: $2.4B total debt on $2.29B market cap creates refinancing risk; AI disruption to textbook economics over five years; -1.22 beta suggests unusual forced selling pressure; private equity owner Platinum still holds 65 percent post-IPO. QUALITY CHECK - Management quality grade: B (CEO Philip D. Moyer brings a software and cloud platform background — pre-McGraw Hill leadership at AWS Public Sector and prior engagements with EMC and Acquia. The digital-first posture under Moyer is showing results in Higher Education. Year one as a public-company CEO showed disciplined execution: two guidance raises, FY27 guide above street. Three more years of consistent execution earns an A.) - Earnings quality grade: C (GAAP earnings remain negative through FY2026 — full-year GAAP net income is meaningfully below zero with non-cash amortization of $400M-plus dragging the GAAP line. Adjusted EPS of 18 cents in Q4 is the operating read. SBC manageable at 1.6 percent of revenue. The Adj-to-GAAP gap is wider than peers because of amortization heritage from the Apollo and Platinum Equity LBOs. Re-occurring revenue at 79 percent of total is the highest quality signal.) CHAPTERS 0:00 Hook 0:14 S0b_Year 1:15 The Print 2:17 S1b_BeatDecomp 2:59 The Trend 3:58 The Segments 4:44 The FCF Bridge 5:41 S4b_MarginQual 6:35 Guidance & The Narrative Diff 7:37 S5b_Catalyst 8:22 Peer Dot-Plot 9:13 S6b_Valuation 9:57 Management & Earnings Quality 10:58 S8a_Call 11:45 S8b_Call KEY METRICS - Q4 FY2026 - Revenue: $0.45B (YoY +7.2%, beat est by +4.7%) - EPS: $0.18 (vs $0.12 est, beat +50.0%) - Operating margin: 12.5% - Free cash flow: $0.11B (24.0% margin) NARRATIVE DIFF - what changed in management tone - Prior call: "On the Q3 FY2026 call, CEO Philip Moyer said: We are investing in AI-powered adaptive learning across ALEKS and Connect. Higher Education is moving structurally to digital subscriptions, and our platform is the beneficiary." - This call: "Our first full year as a public company validated the strategy. Higher Education grew 24 percent in Q4 for the second straight quarter, re-occurring revenue crossed $358 million, and we are entering FY2027 with the strongest platform momentum in our 138-year history." - Tone shift: Beat on revenue by $20M (4.7%) and adj EPS by $0.06 (50%). The standout: Higher Education delivered a second consecutive plus 20 percent quarter, validating the ALEKS and Connect platform thesis. Re-occurring revenue at $358M up 14.8 percent is the SaaS-like signal the post-IPO story needs. The FY27 guide above street is the catalyst the stock has been waiting for. DATA SOURCES - FMP (financialmodelingprep.com) - McGrawHill Q4 FY2026 press release + earnings call DISCLAIMER This is for informational and educational purpose