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Business Description

Industry: Education » Education & Training Services
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Traded in other countries:HM0.Germany,
Houghton Mifflin Harcourt Company provides content, services and technology to both educational institutions and consumers, reaching over 50 million students in more than 150 countries. It also published trade and reference materials.

Houghton Mifflin Harcourt Co was incorporated on March 5, 2010. The Company is engaged in the providing education solutions across a variety of media. It provides content, services and technology to both educational institutions and consumers, reaching over 50 million students in more than 150 countries. Company's intellectual property assets consist of its trademarks and copyrights in its content. It operates in the United States. Its competitors include Pearson Education, Inc., McGraw Hill Education, Cengage Learning, Inc., Scholastic Corporation and K12 Inc.

Guru Investment Theses on Houghton Mifflin Harcourt Co

Baron Funds Comments on Houghton Mifflin Harcourt Co. - Jan 14, 2016

Another recent purchase is Houghton Mifflin Harcourt Co. (NASDAQ:HMHC), a leader in K-12 educational content and services. It has globally recognized brands; rich, iconic and proven content; a reputation as an educational innovator; and a deep competitive moat around its franchise. After going through a pre-packaged bankruptcy in 2012, the company has brought in new management to lead the transition to a business model that incorporates digital instructive content. We think Houghton will benefit from a large and growing market, as educational budgets are augmented and the business relationship shifts from a lumpy textbook adoption cycle to a more sustainable digital subscription-based model.



From the Baron Funds Small Cap Fund winter newsletter 2016.



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Baron Funds Comments on Houghton Mifflin Harcourt Company - Aug 19, 2015

Houghton Mifflin Harcourt Company (NASDAQ:HMHC) is a global leader in Pre-K to 12 educational content and services. The company has dominant domestic market shares in reading, math and sciences, over 40% in the three largest areas of curriculum. They have globally recognized brands; rich, iconic and proven content; an established reputation as an educational innovator; and a deep competitive moat around their franchise.





The company went through a pre-packaged bankruptcy in 2012 to mend an over leveraged balance sheet. New management was brought in from Microsoft and the broader technology industry to lead the transition of the business to a new model, incorporating digital content as part of learning transformation. Products have been re-configured to incorporate the appropriate amount of digital instructive content to enhance the learning experience and learning outcomes. We think we are in very capable hands - the new team has the experience, savvy, and professionalism to take the business to the next level.





The market for educational content is large and has improving fundamentals. The outlook for state and local educational budgets is better after several years of deferred purchases. We believe there will be the funds plus the desire/focus to spend on education. We believe incorporating digital content that necessarily will be updated and served by the content provider will actually make the bond between districts and publishers tighter. The business will evolve into more of a sustainable subscription business relationship as opposed to a lumpy textbook adoption cycle, which we believe will be favored by the markets. . .rightfully so.





In addition, Houghton is expanding into adjacent growth markets. They will leverage their institutional relationships and brands to grow their educational services offerings, the education-related consumer market, the early childhood market, and the assessment market. Each are presently small businesses with, we think, large opportunities to grow.





The company will also selectively pursue acquisitions to enrich their content and overall growth profile. The company recently announced an acquisition of the Educational Technology business of Scholastic, which we believe will establish Houghton as the leader in the intervention market. We are excited about this transaction, since we think this is a top-notch offering and a natural fit, which the much larger Houghton salesforce can grow faster than its previous owner could. We believe the company paid a bargain price, especially after they realize the expected synergies.



We also favor the company’s compelling financial model. The company has been investing heavily in creating digital content and we think soon should reap the benefit of a significantly higher margin profile than when it was a pure print business. Accounting for the new business model is a little complicated since digital components, though paid for upfront, get deferred over the life of the contract for financial reporting. Thus, we look at this on an adjusted cash flow basis. We believe that metric will grow at a low double digit pace for the next five years. We believe they will generate significant free cash flow, which we expect to be used for acquisitions and stock buy backs, which already have started. At 10 times adjusted cash flow and 15 times free cash flow, conservative multiples that we think will be exceeded, and without any further acquisitions, we believe the stock should more than double over the next four years.





From Baron Funds’ second quarter 2015 commentary.



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Top Ranked Articles about Houghton Mifflin Harcourt Co

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The FPA Capital Fund (Trades, Portfolio) on Tuesday disclosed its investment activity for the second quarter which showed managers bought additional shares of seven holdings and bought no new holdings. Read more...
Baron Funds Comments on Houghton Mifflin Harcourt Co. Guru stock highlight
Another recent purchase is Houghton Mifflin Harcourt Co. (NASDAQ:HMHC), a leader in K-12 educational content and services. It has globally recognized brands; rich, iconic and proven content; a reputation as an educational innovator; and a deep competitive moat around its franchise. After going through a pre-packaged bankruptcy in 2012, the company has brought in new management to lead the transition to a business model that incorporates digital instructive content. We think Houghton will benefit from a large and growing market, as educational budgets are augmented and the business relationship shifts from a lumpy textbook adoption cycle to a more sustainable digital subscription-based model. Read more...
Baron Funds Comments on Houghton Mifflin Harcourt Company
Houghton Mifflin Harcourt Company (NASDAQ:HMHC) is a global leader in Pre-K to 12 educational content and services. The company has dominant domestic market shares in reading, math and sciences, over 40% in the three largest areas of curriculum. They have globally recognized brands; rich, iconic and proven content; an established reputation as an educational innovator; and a deep competitive moat around their franchise. Read more...
» More Articles for HMHC

Ratios

vs
industry
vs
history
P/B 2.03
HMHC's P/B is ranked lower than
56% of the 153 Companies
in the Global Education & Training Services industry.

( Industry Median: 1.76 vs. HMHC: 2.03 )
Ranked among companies with meaningful P/B only.
HMHC' s P/B Range Over the Past 10 Years
Min: 1.2  Med: 1.75 Max: 2.55
Current: 2.03
1.2
2.55
P/S 1.56
HMHC's P/S is ranked higher than
50% of the 157 Companies
in the Global Education & Training Services industry.

( Industry Median: 1.58 vs. HMHC: 1.56 )
Ranked among companies with meaningful P/S only.
HMHC' s P/S Range Over the Past 10 Years
Min: 1.46  Med: 1.99 Max: 2.79
Current: 1.56
1.46
2.79
PFCF 10.81
HMHC's PFCF is ranked higher than
51% of the 47 Companies
in the Global Education & Training Services industry.

( Industry Median: 10.97 vs. HMHC: 10.81 )
Ranked among companies with meaningful PFCF only.
HMHC' s PFCF Range Over the Past 10 Years
Min: 6.39  Med: 10.14 Max: 30.93
Current: 10.81
6.39
30.93
POCF 7.48
HMHC's POCF is ranked higher than
68% of the 81 Companies
in the Global Education & Training Services industry.

( Industry Median: 11.24 vs. HMHC: 7.48 )
Ranked among companies with meaningful POCF only.
HMHC' s POCF Range Over the Past 10 Years
Min: 5.5  Med: 7.71 Max: 18.89
Current: 7.48
5.5
18.89
EV-to-EBIT -23.88
HMHC's EV-to-EBIT is ranked lower than
99.99% of the 105 Companies
in the Global Education & Training Services industry.

( Industry Median: 13.25 vs. HMHC: -23.88 )
Ranked among companies with meaningful EV-to-EBIT only.
HMHC' s EV-to-EBIT Range Over the Past 10 Years
Min: -42.3  Med: -27.70 Max: -21.9
Current: -23.88
-42.3
-21.9
EV-to-EBITDA 14.12
HMHC's EV-to-EBITDA is ranked lower than
63% of the 115 Companies
in the Global Education & Training Services industry.

( Industry Median: 9.90 vs. HMHC: 14.12 )
Ranked among companies with meaningful EV-to-EBITDA only.
HMHC' s EV-to-EBITDA Range Over the Past 10 Years
Min: 8  Med: 12.65 Max: 22
Current: 14.12
8
22
Current Ratio 1.47
HMHC's Current Ratio is ranked higher than
54% of the 136 Companies
in the Global Education & Training Services industry.

( Industry Median: 1.39 vs. HMHC: 1.47 )
Ranked among companies with meaningful Current Ratio only.
HMHC' s Current Ratio Range Over the Past 10 Years
Min: 1.47  Med: 2.59 Max: 2.93
Current: 1.47
1.47
2.93
Quick Ratio 0.98
HMHC's Quick Ratio is ranked lower than
71% of the 136 Companies
in the Global Education & Training Services industry.

( Industry Median: 1.31 vs. HMHC: 0.98 )
Ranked among companies with meaningful Quick Ratio only.
HMHC' s Quick Ratio Range Over the Past 10 Years
Min: 0.98  Med: 2.04 Max: 2.51
Current: 0.98
0.98
2.51
Days Inventory 89.96
HMHC's Days Inventory is ranked lower than
84% of the 85 Companies
in the Global Education & Training Services industry.

( Industry Median: 9.41 vs. HMHC: 89.96 )
Ranked among companies with meaningful Days Inventory only.
HMHC' s Days Inventory Range Over the Past 10 Years
Min: 78.7  Med: 81.90 Max: 96.53
Current: 89.96
78.7
96.53
Days Sales Outstanding 45.87
HMHC's Days Sales Outstanding is ranked lower than
58% of the 119 Companies
in the Global Education & Training Services industry.

( Industry Median: 31.55 vs. HMHC: 45.87 )
Ranked among companies with meaningful Days Sales Outstanding only.
HMHC' s Days Sales Outstanding Range Over the Past 10 Years
Min: 65.05  Med: 72.27 Max: 84.22
Current: 45.87
65.05
84.22
Days Payable 44.45
HMHC's Days Payable is ranked higher than
68% of the 101 Companies
in the Global Education & Training Services industry.

( Industry Median: 23.74 vs. HMHC: 44.45 )
Ranked among companies with meaningful Days Payable only.
HMHC' s Days Payable Range Over the Past 10 Years
Min: 22.71  Med: 41.84 Max: 51.62
Current: 44.45
22.71
51.62

Valuation & Return

vs
industry
vs
history
Price/Median PS Value 0.80
HMHC's Price/Median PS Value is ranked higher than
63% of the 145 Companies
in the Global Education & Training Services industry.

( Industry Median: 0.92 vs. HMHC: 0.80 )
Ranked among companies with meaningful Price/Median PS Value only.
HMHC' s Price/Median PS Value Range Over the Past 10 Years
Min: 0.87  Med: 1.05 Max: 1.32
Current: 0.8
0.87
1.32
Earnings Yield (Greenblatt) (%) -4.17
HMHC's Earnings Yield (Greenblatt) (%) is ranked lower than
73% of the 160 Companies
in the Global Education & Training Services industry.

( Industry Median: 4.20 vs. HMHC: -4.17 )
Ranked among companies with meaningful Earnings Yield (Greenblatt) (%) only.
HMHC' s Earnings Yield (Greenblatt) (%) Range Over the Past 10 Years
Min: -5.1  Med: 0.60 Max: 0.7
Current: -4.17
-5.1
0.7

More Statistics

Revenue (TTM) (Mil) $1,459
EPS (TTM) $ -1.21
Short Percentage of Float6.31%
52-Week Range $14.72 - 26.86
Shares Outstanding (Mil)123.19

Analyst Estimate


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Dec16 Dec17
Revenue (Mil $) 1,554 1,592
EPS ($) -0.94 -0.86
EPS w/o NRI ($) -0.94 -0.86
EPS Growth Rate
(3Y to 5Y Estimate)
N/A
Dividends Per Share ($)
» More Articles for HMHC

Headlines

Articles On GuruFocus.com
FPA Capital Fund Continues to Buy Western Digital, Veeco Jul 29 2016 
FPA Capital Fund Increases 5 of Its Current Holdings Jul 13 2016 
FPA Capital Fund Buys Sanderson Farms, Sells Barnes & Noble Jan 19 2016 
Baron Funds Comments on Houghton Mifflin Harcourt Co. Jan 14 2016 
Baron Funds Comments on Houghton Mifflin Harcourt Company Aug 19 2015 
Manning & Napier's Top 5 New Stock Buys of Q2 Jul 09 2015 
Scott Black Adds 12 New Positions During 1QFY15 To His Portfolio May 21 2015 
John Paulson Takes Giant Stakes in 3 Companies Feb 18 2014 
A First Class Publisher in the Education Market Feb 14 2014 

More From Other Websites
Houghton Mifflin Harcourt to Participate in the Oppenheimer 19th Annual Technology, Internet &... Jul 26 2016
New Report from Houghton Mifflin Harcourt Reveals Educators Hungry for Professional Learning and... Jul 20 2016
Houghton Mifflin Harcourt Appoints Tracey Weber to Board of Directors Jul 20 2016
HOUGHTON MIFFLIN HARCOURT CO Files SEC form 8-K, Change in Directors or Principal Officers Jul 20 2016
FPA Capital Nearly Triples Stake in Houghton Mifflin Harcourt Jul 19 2016
Houghton Mifflin Harcourt Schedules Conference Call to Discuss Second Quarter Results Jul 14 2016
FPA Capital Fund Buys More Shares of 5 of Its Current Holdings Jul 13 2016
Houghton Mifflin Harcourt Appoints Brian Napack to Board of Directors Jun 30 2016
HOUGHTON MIFFLIN HARCOURT CO Files SEC form 8-K, Change in Directors or Principal Officers,... Jun 30 2016
Houghton Mifflin Harcourt Appoints Brian Napack to Board of Directors Jun 30 2016
Houghton Mifflin Harcourt Unveils First-Ever Curriculum-Based Virtual Reality Field Trips for Google... Jun 27 2016
Houghton Mifflin Harcourt Kicks Off "Curious World" Summer Tour, Inspiring Playful Learning... Jun 15 2016
All Aboard For Curious George's Latest Digital Adventure Jun 09 2016
Billionaire Marc Lasry’s Favorite Stock Picks Jun 06 2016
[$$] Houghton Mifflin's Story to End Happily Jun 03 2016
ETF’s with exposure to Houghton Mifflin Harcourt Co. : June 3, 2016 Jun 03 2016
Hedge Funds’ Favorite Education Stocks Jun 03 2016
11 Leading Educators Announced as Next Group of Heinemann Fellows May 24 2016
ETF’s with exposure to Houghton Mifflin Harcourt Co. : May 23, 2016 May 23 2016
HOUGHTON MIFFLIN HARCOURT CO Files SEC form 8-K, Submission of Matters to a Vote of Security Holders May 20 2016

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