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GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

1. The debt burden that the company has as measured by its Interest coverage (current year).
2. Debt to revenue ratio. The lower, the better
3. Altman Z-score.

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

Financial Strength : 4/10

vs
industry
vs
history
Cash to Debt 0.40
HMHC's Cash to Debt is ranked lower than
81% of the 139 Companies
in the Global Education & Training Services industry.

( Industry Median: 5.13 vs. HMHC: 0.40 )
Ranked among companies with meaningful Cash to Debt only.
HMHC' s 10-Year Cash to Debt Range
Min: 0.4  Med: 2.16 Max: N/A
Current: 0.4
Equity to Asset 0.43
HMHC's Equity to Asset is ranked lower than
70% of the 121 Companies
in the Global Education & Training Services industry.

( Industry Median: 0.54 vs. HMHC: 0.43 )
Ranked among companies with meaningful Equity to Asset only.
HMHC' s 10-Year Equity to Asset Range
Min: 0.43  Med: 0.61 Max: 0.64
Current: 0.43
0.43
0.64
F-Score: 4
Z-Score: 0.15
M-Score: -3.81
GuruFocus Profitability Rank ranks how profitable a company is and how likely the company’s business will stay that way. It is based on these factors:

1. Operating Margin
2. Trend of the Operating Margin (5-year average). The company with an uptrend profit margin has a higher rank.
••3. Consistency of the profitability
4. Piotroski F-Score
5. Predictability Rank•

The maximum rank is 10. A rank of 7 or higher means a higher profitability and may stay that way. A rank of 3 or lower indicates that the company has had trouble to make a profit.

Profitability Rank is not directly related to the Financial Strength Rank. But if a company is consistently profitable, its financial strength will be stronger.

Profitability & Growth : 2/10

vs
industry
vs
history
Operating margin (%) -7.77
HMHC's Operating margin (%) is ranked lower than
83% of the 140 Companies
in the Global Education & Training Services industry.

( Industry Median: 7.81 vs. HMHC: -7.77 )
Ranked among companies with meaningful Operating margin (%) only.
HMHC' s 10-Year Operating margin (%) Range
Min: -157.27  Med: -7.84 Max: -6.22
Current: -7.77
-157.27
-6.22
Net-margin (%) -10.62
HMHC's Net-margin (%) is ranked lower than
81% of the 141 Companies
in the Global Education & Training Services industry.

( Industry Median: 5.00 vs. HMHC: -10.62 )
Ranked among companies with meaningful Net-margin (%) only.
HMHC' s 10-Year Net-margin (%) Range
Min: -168.48  Med: -8.10 Max: -6.78
Current: -10.62
-168.48
-6.78
ROE (%) -8.62
HMHC's ROE (%) is ranked lower than
79% of the 135 Companies
in the Global Education & Training Services industry.

( Industry Median: 7.78 vs. HMHC: -8.62 )
Ranked among companies with meaningful ROE (%) only.
HMHC' s 10-Year ROE (%) Range
Min: -13.73  Med: -6.18 Max: -5.86
Current: -8.62
-13.73
-5.86
ROA (%) -4.77
HMHC's ROA (%) is ranked lower than
77% of the 141 Companies
in the Global Education & Training Services industry.

( Industry Median: 3.79 vs. HMHC: -4.77 )
Ranked among companies with meaningful ROA (%) only.
HMHC' s 10-Year ROA (%) Range
Min: -3.77  Med: -3.74 Max: -2.77
Current: -4.77
-3.77
-2.77
ROC (Joel Greenblatt) (%) -29.75
HMHC's ROC (Joel Greenblatt) (%) is ranked lower than
83% of the 138 Companies
in the Global Education & Training Services industry.

( Industry Median: 19.13 vs. HMHC: -29.75 )
Ranked among companies with meaningful ROC (Joel Greenblatt) (%) only.
HMHC' s 10-Year ROC (Joel Greenblatt) (%) Range
Min: -31.19  Med: -29.18 Max: 21.85
Current: -29.75
-31.19
21.85
» HMHC's 10-Y Financials

Financials


Revenue & Net Income
Cash & Debt
Oprt. Cash Flow & Free Cash Flow

» Details

Guru Trades

Q3 2014

HMHC Guru Trades in Q3 2014

John Paulson 30,912,558 sh (unchged)
Pioneer Investments 330,721 sh (unchged)
John Burbank Sold Out
» More
Q4 2014

HMHC Guru Trades in Q4 2014

Jim Simons 39,300 sh (New)
Paul Tudor Jones 32,772 sh (New)
Chuck Royce 137,000 sh (New)
John Paulson 30,912,558 sh (unchged)
Pioneer Investments 325,616 sh (-1.54%)
» More
Q1 2015

HMHC Guru Trades in Q1 2015

Scott Black 81,273 sh (New)
John Keeley 1,020,450 sh (New)
Jim Simons 352,400 sh (+796.69%)
Chuck Royce 360,759 sh (+163.33%)
John Paulson 30,912,558 sh (unchged)
Pioneer Investments 325,532 sh (-0.03%)
Paul Tudor Jones 26,253 sh (-19.89%)
» More
Q2 2015

HMHC Guru Trades in Q2 2015

Joel Greenblatt 42,386 sh (New)
Manning & Napier Advisors, Inc 3,094,493 sh (New)
Louis Moore Bacon 200,920 sh (New)
Julian Robertson 68,800 sh (New)
Ron Baron 1,021,511 sh (New)
Pioneer Investments 726,694 sh (+123.23%)
John Keeley 1,569,690 sh (+53.82%)
Scott Black 81,273 sh (unchged)
Paul Tudor Jones Sold Out
Jim Simons Sold Out
Chuck Royce 347,759 sh (-3.60%)
John Paulson 12,229,224 sh (-60.44%)
» More
» Details

Insider Trades

Latest Guru Trades with HMHC

(List those with share number changes of more than 20%, or impact to portfolio more than 0.1%)

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Guru Investment Theses on Houghton Mifflin Harcourt Company

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.



Check out Ron Baron latest stock trades

Top Ranked Articles about Houghton Mifflin Harcourt Company

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...

Ratios

vs
industry
vs
history
P/B 2.13
HMHC's P/B is ranked lower than
60% of the 124 Companies
in the Global Education & Training Services industry.

( Industry Median: 1.61 vs. HMHC: 2.13 )
Ranked among companies with meaningful P/B only.
HMHC' s 10-Year P/B Range
Min: 1.2  Med: 1.59 Max: 2.55
Current: 2.13
1.2
2.55
P/S 2.32
HMHC's P/S is ranked lower than
64% of the 139 Companies
in the Global Education & Training Services industry.

( Industry Median: 1.43 vs. HMHC: 2.32 )
Ranked among companies with meaningful P/S only.
HMHC' s 10-Year P/S Range
Min: 1.61  Med: 2.04 Max: 2.79
Current: 2.32
1.61
2.79
PFCF 7.62
HMHC's PFCF is ranked higher than
82% of the 50 Companies
in the Global Education & Training Services industry.

( Industry Median: 15.45 vs. HMHC: 7.62 )
Ranked among companies with meaningful PFCF only.
HMHC' s 10-Year PFCF Range
Min: 6.42  Med: 8.80 Max: 30.7
Current: 7.62
6.42
30.7
POCF 6.58
HMHC's POCF is ranked higher than
80% of the 75 Companies
in the Global Education & Training Services industry.

( Industry Median: 10.34 vs. HMHC: 6.58 )
Ranked among companies with meaningful POCF only.
HMHC' s 10-Year POCF Range
Min: 5.53  Med: 7.58 Max: 18.87
Current: 6.58
5.53
18.87
Current Ratio 2.30
HMHC's Current Ratio is ranked higher than
67% of the 123 Companies
in the Global Education & Training Services industry.

( Industry Median: 1.55 vs. HMHC: 2.30 )
Ranked among companies with meaningful Current Ratio only.
HMHC' s 10-Year Current Ratio Range
Min: 2.3  Med: 2.67 Max: 2.93
Current: 2.3
2.3
2.93
Quick Ratio 1.78
HMHC's Quick Ratio is ranked higher than
59% of the 123 Companies
in the Global Education & Training Services industry.

( Industry Median: 1.49 vs. HMHC: 1.78 )
Ranked among companies with meaningful Quick Ratio only.
HMHC' s 10-Year Quick Ratio Range
Min: 1.72  Med: 2.09 Max: 2.51
Current: 1.78
1.72
2.51
Days Inventory 93.77
HMHC's Days Inventory is ranked lower than
84% of the 77 Companies
in the Global Education & Training Services industry.

( Industry Median: 7.83 vs. HMHC: 93.77 )
Ranked among companies with meaningful Days Inventory only.
HMHC' s 10-Year Days Inventory Range
Min: 81.09  Med: 81.90 Max: 96.53
Current: 93.77
81.09
96.53
Days Sales Outstanding 114.06
HMHC's Days Sales Outstanding is ranked lower than
84% of the 117 Companies
in the Global Education & Training Services industry.

( Industry Median: 34.68 vs. HMHC: 114.06 )
Ranked among companies with meaningful Days Sales Outstanding only.
HMHC' s 10-Year Days Sales Outstanding Range
Min: 65.05  Med: 70.11 Max: 84.22
Current: 114.06
65.05
84.22

Valuation & Return

vs
industry
vs
history
Price/Median PS Value 1.14
HMHC's Price/Median PS Value is ranked lower than
71% of the 127 Companies
in the Global Education & Training Services industry.

( Industry Median: 0.95 vs. HMHC: 1.14 )
Ranked among companies with meaningful Price/Median PS Value only.
HMHC' s 10-Year Price/Median PS Value Range
Min: 0.85  Med: 1.02 Max: 1.29
Current: 1.14
0.85
1.29
Earnings Yield (Greenblatt) (%) -3.16
HMHC's Earnings Yield (Greenblatt) (%) is ranked lower than
77% of the 134 Companies
in the Global Education & Training Services industry.

( Industry Median: 5.70 vs. HMHC: -3.16 )
Ranked among companies with meaningful Earnings Yield (Greenblatt) (%) only.
HMHC' s 10-Year Earnings Yield (Greenblatt) (%) Range
Min: -3.57  Med: 0.60 Max: 0.7
Current: -3.16
-3.57
0.7

Analyst Estimate

Dec15 Dec16
Revenue(Mil) 1,524 1,651
EPS($) -0.59 -0.25
EPS without NRI($) -0.59 -0.25

Business Description

Industry: Education » Education & Training Services
Compare: » details
» More Articles for HMHC

Headlines

Articles On GuruFocus.com
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 

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