McGraw Hill (MH) has just closed FY 2026 with fourth quarter revenue of US$463.7 million and a basic EPS loss of US$0.26, alongside a full year trailing revenue base of about US$2.1 billion and basic EPS of US$0.19. Over recent periods, revenue has ranged from US$416.5 million to US$669.2 million a quarter, while quarterly EPS has swung between a loss of US$0.94 and a gain of US$0.57, leaving investors focused on how consistently the company can now convert its top line into sustainable margins.

See our full analysis for McGraw Hill.

With the earnings print on the table, the next step is to line these results up against the prevailing narratives about McGraw Hill and see which stories the numbers support, and which they challenge.

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High P/E of 63.7x Puts Pressure on Execution

• McGraw Hill is on a trailing P/E of 63.7x, compared with a peer average of 52.7x and a US Consumer Services industry average of 16.7x, so the stock is priced on earnings that are much richer than the broader group.
• Bulls point out that trailing 12 month net income of US$35.3 million and five year average earnings growth of 19.9% a year give some foundation for that higher multiple, yet:
  • Current earnings forecasts of 35.2% a year growth and revenue forecasts of 2.9% a year lean heavily on margin improvement rather than a fast growing top line.
  • The DCF fair value of US$45.42 is well above the current share price of US$11.76, which strongly supports the bullish view on valuation while still sitting against a high reported P/E.

Bulls argue that a high earnings multiple only makes sense if profit growth stays ahead of expectations, and that is exactly what the current narrative is built on, so it is worth reading the full bullish case in detail before you decide how much weight to put on that DCF gap. 🐂 McGraw Hill Bull Case

Profitability Returns but Interest Coverage Stays Thin

• On a trailing 12 month basis, McGraw Hill moved from a net loss of US$85.8 million a year ago to net income of US$35.3 million and basic EPS of US$0.19, yet interest payments are still flagged as not being well covered by earnings.
• Bears highlight that weak interest coverage can limit flexibility even when profits return, and the recent numbers leave room for that concern:
  • The last 12 months still include a one off loss of US$64.8 million, which distorts the earnings base used to service debt and may make coverage ratios look less resilient.
  • Quarterly net income swung from a loss of US$156.9 million in FY 2025 Q4 to a profit of US$105.3 million in FY 2026 Q2 before falling back to a loss of US$50.3 million in FY 2026 Q4, which bears see as evidence that earnings are not yet consistently supporting fixed charges.

Skeptics warn that until earnings are both higher and more stable, interest costs could remain a pressure point even after the return to profitability, so it can be useful to walk through the full cautious thesis before leaning too hard on the recent turnaround. 🐻 McGraw Hill Bear Case

US$2.1b Trailing Revenue vs Modest Growth Outlook

• Trailing 12 month revenue is about US$2.1b, and the revenue forecast of 2.9% a year is below the 12.5% expected for the wider US market, which means the story leans more on earnings quality than on rapid sales expansion.
• Consensus narrative points to digital and subscription trends as key supports for that earnings focus, yet the reported numbers show some tension with that view:
  • Within FY 2026, revenue moved between US$434.2 million and US$669.2 million a quarter, while quarterly EPS ranged from a loss of US$0.26 to a gain of US$0.57, indicating that profitability so far has been more variable than a smooth digital subscription path might suggest.
  • At the same time, the combination of a high 63.7x P/E, a DCF fair value of US$45.42 and an analyst price target level of US$18.58 puts a lot of weight on those digital and recurring revenue themes eventually translating into steadier margins on this US$2.1b revenue base.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for McGraw Hill on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Seeing both risks and rewards in the story so far? Take a moment to review the numbers for yourself and weigh how they fit your goals, then look through the 3 key rewards and 2 important warning signs.

See What Else Is Out There

McGraw Hill's high 63.7x P/E, thin interest coverage and uneven earnings leave plenty of questions about how durable its profitability really is.

If that instability gives you pause, it could be worth balancing your watchlist with companies screened for stronger financial cushions using the solid balance sheet and fundamentals stocks screener (48 results).

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.