Not rated

26 May 2010 By Agnes Crane

The credit rater belongs to McGrawHill. But that s far from obvious tally the likely values of the company s other units, and there s under $1 billion left for ratings. Sure, rating firms are rightly under fire. But Moody s is still worth $6 billion. Something is offkilter.

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McGrawHill stock has fallen more than 20 percent since midApril to trade around $28 per share on May 25, giving the company a market capitalization of some $9 billion. New regulation and pending lawsuits involving its ratings unit, Standard & Poor's, have fed investor worries.

JPMorgan estimates McGrawHill's 2011 EBITDA at $1.7 billion. S&P credit ratings would account for around $850 million of that, while the company's education publishing would account for around $435 million. The information and media business would bring in $180 million in EBITDA, with nonratings financial services producing $390 million. Overhead would offset those operating profit figures by some $155 million in 2011.

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